Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

MEMBERS SWORN

The following Members took and subscribed the Oath:

John Anthony Langford-Holt, esquire, Shrewsbury.
Edward Lancelot Mallalieu, esquire, Q.C., Brigg.

ELECTION EXPENSES

Address for the Return of the Expenses of each Candidate at the General Election of May, 1955, in Great Britain and Northern Ireland, as transmitted to the Returning Officers pursuant to the Representation of the People Act, 1949, and of the number of votes polled by each candidate, the number of polling districts and stations, the number of electors, and the number of persons entitled to vote by post.—[Sir H. Lucas-Tooth.]

Oral Answers to Questions — COMMONWEALTH RELATIONS

Bechuanaland (Seretse Khama)

Mr. Hale: asked the Under-Secretary of State for Commonwealth Relations what reasons now prevent the return of Seretse Khama to Bechuanaland.

The Under-Secretary of State for Commonwealth Relations (Mr. Douglas Dodds-Parker): In a statement made in both Houses on 27th March, 1952, Her Majesty's Government explained that they had decided that the refusal of the Labour Government to recognise Seretse Khama should be made permanent, and that the good order and well-being of the Reserve required that he should absent himself from the Protectorate until an alternative chief has been securely established with his own Administration. It has been made clear on a number of

occasions that this decision is final and Her Majesty's Government are not prepared to depart from it.

Mr. Hale: Does the hon. Gentleman realise that in these circumstances we shall have to take steps to depart from Her Majesty's Government? Is he not aware that the original Labour decision was suspension for five years and that that has expired? Is it not rather contemptible to keep "passing the buck" back to the previous Government? In view of the fact that the statement was made in 1952, does the hon. Gentleman inform us that no further consideration has been given to it since 1952, and does that mean that the Government cannot in any circumstances reconsider the matter?

Mr. Dodds-Parker: The hon. Member cannot shrug off the responsibility of the former Government for taking a decision which was supported by us and was fully debated in 1952 and supported by Parliament.

India Office Library

Mr. Hyde: asked the Under-Secretary of State for Comonwealth Relations the plans for the future disposition of the former India Office Library.

Mr. Dodds-Parker: I would draw my hon. Friend's attention to the statement made in another place by my noble Friend the Secretary of State for Commonwealth Relations on 13th June. As it is rather lengthy, I will, with permission, circulate it in the OFFICIAL REPORT.

Mr. Hyde: Is my hon. Friend aware that the decision to keep in this country what has been described as the oldest and finest treasure-house of Oriental learning in the world will be received with great satisfaction by scholars and students everywhere, and particularly in India and Pakistan? At the same time, will my hon. Friend do his best to facilitate access to this unique library, which on account of its present physical position is subject to strict security regulations?

Mr. Dodds-Parker: I will make a note of the first part of my hon. Friend's supplementary question. As to the second part, I am quite prepared to receive approaches on the question of what easier access to this collection might be possible.

Following is the statement:
I am obliged to the noble Lord for giving me the opportunity to make a statement. Your Lordships may have seen correspondence in the newspapers, in the course of which, as a result of the published account of some discussions taking place at New Delhi, a number of scholars and learned bodies have expressed serious misgivings lest it should have been decided to disperse or export the contents of the India Office Library. Let me therefore say at once that no such decision has been taken; nor could it be taken without the full concurrence of the United Kingdom Government, who were not parties to the discussions in question.
The India Office Library is one of the greatest Oriental libraries in the world. It contains some 280,000 printed books, and a wealth of other material; including a great collection of Manuscripts in English and in Oriental languages. Its scope is not confined to India and Pakistan; it extends also to the literatures, histories, and cultures of many other Eastern countries, including for example Burma, Thailand, Malaya, Ceylon, Tibet, Nepal, Persia, and Arabia. It has always been readily accessible to scholars and research workers from all over the world. In the view of Her Majesty's Government, the right course is that the Library should remain intact and in this country. But we would, of course, readily consider any suggestions that the Governments of India and Pakistan may wish to make to us as regards the detailed administration of, or access to, the Library.
As regards the historical records, that is to say the archives of the East India Company and the India Office, which are now in the custody of the Commonwealth Relations Office, I am glad to be able to assure the noble Lord that Her Majesty's present Government adhere to the statement made in this House on 23rd July, 1947, by the noble Lord, the Earl of Listowel, who was then Secretary of State for India, to the effect that it was the Government's intention to retain those records in this country.

Offences, Northern Ireland (Extradition Treaty)

Mr. Chichester-Clark: asked the Under-Secretary of State for Commonwealth Relations what progress has been made towards the conclusion of an extradition treaty between Her Majesty's Government and the Government of Eire, so as to cover offences committed in Northern Ireland.

Mr. Dodds-Parker: I have nothing to add to the replies given by my predecessor and myself to my hon. Friends the Members for Belfast, North (Mr. Hyde) and Belfast, East (Mr. McKibbin) respectively on 29th July and 28th October last year.

Mr. Chichester-Clark: Is my hon. Friend aware that there is grave concern about this matter, especially in the light of recent reports in the Press about renewed Irish Republican Army activities?

Mr. Dodds-Parker: Yes, I am fully aware of the feeling in Northern Ireland, and I can assure my hon. Friend that I will do whatever is possible to ease the situation.

Oral Answers to Questions — TRADE AND COMMERCE

Monopolies Commission

Mr. Dodds: asked the President of the Board of Trade (1) if he has yet come to a decision in the consideration he has given to referring to the Monopolies Commission the prices of petrol and oil for investigation;
(2) if he is aware that eight British electrical firms have submitted identical tenders for equipment for the Snowy Mountain hydro-electric and irrigation scheme; and what steps he intends to take to prevent this practice, in view of the harm which it does to our export reputation and trade.

Mr. Wade: asked the President of the Board of Trade what representations have been made to him on the subject of identical tenders received by local authorities for a variety of materials required for building and other purposes; and what steps he proposes to take as a result of such representations.

Lieut.-Colonel Lipton: asked the President of the Board of Trade what representations he has received from local authorities on the subject of price rings.

Mr. Wade: asked the President of the Board of Trade whether he will refer the subject of price fixing in the cement industry to the Monopolies Commission.

Miss Burton: asked the President of the Board of Trade whether he is aware that local authorities are disturbed at the price-fixing indicated by identical tenders which are submitted to them; that the growth of this practice has been such that the Association of Municipal Corporations is now collecting evidence on the subject; and whether he will therefore refer the problem to the Monopolies Commission in so far as cement, chain


link fencing, bolts, nuts and washers, wire nails, sheet lead, pipes and traps, galvanised metal windows and standard metal windows and doors, road tar, bitumen emulsion and precast concrete goods are concerned.

Mr. J. Johnson: asked the President of the Board of Trade whether he will have the supply of cement by the cement industry investigated by the Monopolies Commission.

Mr. Stokes: asked the President of the Board of Trade whether he will refer the oil industry to the Monopolies Commission.

The President of the Board of Trade (Mr. Peter Thorneycroft): With permission I will answer these Questions together. Since the Monopolies Commission was set up it has produced 11 Reports, on eight of which action has already been taken. The latest of these Reports is one under Section 15 of the Monopolies and Restrictive Practices Act, the receipt of which was announced by the Prime Minister on 9th June. At the present time the Commission has nine inquiries on hand and it is expected that reports on at least three of these will be received before the end of this year.
I have had under consideration a programme of further references to the Commission for the next six to nine months. On 23rd July, 1952, when announcing the first reference under Section 15 of the Act into practices which prevail throughout industry generally, I emphasised the importance of this type of investigation. I now propose to send to the Commission a further general reference under Section 15 covering common prices and level tendering, both of which have been much in the public mind in recent months.
I intend in addition to make a number of individual references. I wish to emphasise, as I have done before, that the making of a reference in no way prejudges the question whether or not the arrangements involved operate against the public interest. It is indeed one of the main functions of the Commission to inquire into this point. The references which I expect to make very shortly will be on the supply of steel frames for buildings, electrical street lighting, tea, chemical fertilisers and electric batteries.

Mr. Stokes: On a point of order. Before we proceed to supplementary questions, may I ask whether it is not without precedent in this House that a Minister should lump together such a variety of Questions and endeavour to answer them by one quite unsatisfactory Answer?

Mr. Speaker: I have known that done several times.

Mr. Dodds: Further to that point of order. Is it not out of order for the Minister to lump in Questions about oil and then not make any reference to them afterwards?

Miss Burton: In thanking the President of the Board of Trade for the progress revealed in the Answer, may I ask if he is aware that price-fixing behind closed doors has caused great anxiety to local authorities? Will he be prepared to remit evidence submitted to him by local authorities to the Monopolies Commission on this question?

Mr. Thorneycroft: I am sure it will be open to local authorities to give evidence before the Commission. This reference will cover the whole field of common prices and level tendering. It is an important matter which, I think, deserves a general reference of this kind.

Mr. Stokes: May I ask the President of the Board of Trade two questions?

Hon. Members: Do not lump them together.

Mr. Stokes: I always expect the Tories to copy us. If they borrow my phrases I do not mind. There is something to be said in some cases for similar prices to save labour, but might not the difficulty be overcome by insisting that when similar prices are put in they shall be accompanied ultimately by a costs certificate declaring the amount of profit made on the job and, if anything beyond the agreed profit has been made, that amount should be deducted from the contract? Secondly, am I to understand that the reason the President has veiled his Answer on the oil monopoly is that he has been already got at by the oil interests?

Hon. Members: Withdraw.

Mr. Speaker: I am not sure whether the right hon. Member meant anything sinister by that remark.

Mr. Stokes: Yes, I did, Sir.

Mr. Speaker: If the right hon. Member meant to accuse the President of the Board of Trade of any wrongful practice, he ought to withdraw that.

Mr. Stokes: I beg your pardon, Mr. Speaker. I am not accusing the President; I am accusing the oil interests.

Mr. Speaker: I think that is rather unsatisfactory. The right hon. Member has been a Member of this House for a long time and knows the rules as well as I do. He ought to observe the proper courtesies.

Mr. Stokes: In so far as I was imputing any dishonourable action to the President, I withdraw, but so far as I imputed dishonourable intentions to the oil industry, I entirely confirm them.

Mr. G. R. Strauss: May I ask the President of the Board of Trade, in connection with his suggested reference to the Monopolies Commission of the structural steel frame industry, if it is not a fact that as the major concerns in that industry were under public ownership before denationalisation it would be quite unnecessary to refer that industry to the Commission if the Government had not denationalised the iron and steel industry?

Mr. Thorneycroft: I do not think that is the case at all. I think these practices have been going on for a considerable time. I express no judgment one way or the other as to whether they are right or wrong or in the national interest, and I do not think the question of ownership enters into this matter. The question is, is the practice in the national interest? I think that is a sensible question for the Commission to inquire into.

Mr. Strauss: If they were under public ownership, the Government would give directions to these people about practices which they should pursue in the public interest.

Mr. Thorneycroft: I hardly think it would be wise to nationalise on a vast scale in order that directions on all these complex matters might be issued by Government Departments.

Mr. Attlee: Was it not unwise, in view of the result, to denationalise the steel industry?

Mr. Thorneycroft: It is very doubtful whether any of these firms was ever nationalised.

Mr. Speaker: We are to have a debate on many of these questions, including prices, and we really cannot debate them at Question Time, in fairness to other hon. Members who have Questions on the Order Paper.

Mr. Stokes: Now that everyone has got a little cooler—[HON. MEMBERS: "Oh."—well, I have—may I ask the President to answer my question about a costs certificate? Surely he would get over a great deal of his difficulty if he insisted on a costs certificate and insisted that anything above an agreed amount of profit should be deducted?

Mr. Thorneycroft: The right hon. Member has put forward one suggestion which fits into the vast and complicated picture of common prices and level tendering. Just because, as he admitted, the answer may differ as between one industry and another, I am making a general reference so that the Commission can advise on points of that kind.

Mr. Dodds: On a point of order. Do I understand that as I raised a point of order seeking your guidance, Mr. Speaker. I forfeited any right to ask a supplementary question on Question No. 4?

Mr. Speaker: There is really no right to ask a supplementary question. I try to allow it if I can, but in this case there are so many hon. Members wishing to pursue the subject that I think it would be in the interests of the House as a whole if we passed on and discussed these matters in the debate which is to ensue.

Mr. S. Silverman: On a point of order. When Questions are answered together the Minister always uses the formula "with permission, I will answer this Question with" other Questions. It has always been assumed that that permission is the permission of the Chair and of the hon. Members concerned. It is a great incitement to such hon. Members to withhold that permission if the effect of giving it is to deprive them of the opportunity which otherwise they would have of asking a supplementary question.

Mr. Speaker: I think that is perfectly true in most cases, but this is such a contentious subject which raises so many other things, and we have so many Questions on the Paper that I must ask the House to follow this course.

Captain Pilkington: Mr. Speaker, are you able to require the right hon. Member for Ipswich (Mr. Stokes) to repeat his allegation against the oil companies outside this House?

Mr. Speaker: I am not concerned with allegations made against oil companies. They do not come under my protection, but hon. Members do. I thought the right hon. Member admitted, in a way which is understood by the House, that perhaps he was a little heated at the time; at least he said he was a little cooler at one subsequent moment.

Miss Burton: asked the President of the Board of Trade whether he is now prepared to take steps to speed up the work of the Monopolies Commission, both in the preparation of reports and the promptitude with which these are dealt with by Her Majesty's Government.

Mr. P. Thorneycroft: I have already taken steps to increase the Commission's output by doubling its size and enabling it to work in groups. My colleagues and I will continue to take prompt action where the Commission's reports show this to be desirable in the public interest.

Miss Burton: The President will be aware that we would not wish the members of the Government to be doubled to enable them to deal with these matters more promptly, but is he aware that people are concerned at the long time which is taken by Her Majesty's Government to deal with these reports, and could he give any guarantee that they will be more prompt in future?

Mr. Thorneycroft: We shall certainly be as expeditious in the national interest as we can.

Mr. Grimond: asked the President of the Board of Trade what inquiries are at present being undertaken by the Monopolies Commission.

Mr. P. Thorneycroft: There are nine of them. With permission, I will circulate full particulars in the OFFICIAL REPORT.

Mr. Grimond: Is the President of the Board of Trade satisfied that when this extra work has been put on the Commission it will have the powers and the personnel to deal with these inquiries, some of which he himself has described as vast and complicated?

Mr. Thorneycroft: Yes, certainly, I think that the Commission is fully adequate to deal with these inquiries.

Following are the particulars:

The supply and export of pneumatic tyres.
The supply in Central Scotland of sand and gravel suitable for building or civil engineering purposes.
The supply of hard fibre cordage.
The supply of linoleum.
The supply of certain industrial and medical gases (oxygen, dissolved acetylene and propane).
The supply and export of certain electrical and allied machinery and plant.
The supply of certain rubber footwear.
The supply of standard metal windows and doors; and
The supply of electronic valves and cathode ray tubes.

Newsprint Controls

Lieut.-Colonel Lipton: asked the President of the Board of Trade when he will end the rationing of newsprint.

Mr. P. Thorneycroft: I regret I am not yet able to say when it might be possible to revoke the existing controls on newsprint.

Lieut.-Colonel Lipton: Why does the President of the Board of Trade keep on providing one lame substitute after another for continuing rationing 10 years after the war? How does it come about that the Government still believe in rationing newsprint when dollars have been wasted on so many other imports which could be obtained from non-dollar sources?

Mr. Thorneycroft: While naturally sharing the hon. and gallant Gentleman's dislike of controls, which I appreciate—

Lieut.-Colonel Lipton: Rationing.

Mr. Thorneycroft: —controls and rationing, I must say that the question whether we can drop all control of the import of newsprint depends upon the balance-of-payments situation and other matters which we shall be discussing shortly in the general debate. So long as we have control of imports, it is necessary to have some form of rationing


arrangement. In so far as this can be taken over by the industry, I should be very happy.

Mr. Woodburn: Is the right hon. Gentleman aware that the lovely pictures of bathing beauties in the newsprint are the only signs of summer that we see?

Mr. Thorneycroft: The right hon. Gentleman must not press me to say what ought to go into the newspapers.

G.A.T.T. (West Indies)

Mr. Hector Hughes: asked the President of the Board of Trade if he is now in a position to make a statement on the General Agreement on Tariffs and Trade which operates harshly on the trade and industry of the West Indies, indicating what steps he proposes to take to mitigate the hardships caused thereby.

Mr. P. Thorneycroft: Her Majesty's Government are at present examining the problems of the British West Indies in the light of the special provisions for assisting the Colonies described in the statement of policy on the G.A.T.T. (Cmd. 9413).

Mr. Hughes: Does the Minister realise that he is being really unfair to the West Indies, particularly to Jamaica, which stands greatly in need of economic aid from this country? Will he not be a bit more explicit, especially at a time when the federation of the West Indies may be imperilled by his contumacity?

Mr. Thorneycroft: The hon. and learned Gentleman will remember that I negotiated special arrangements which I think will be of some assistance in this case.

Fish (Exports to Italy)

Mr. Hector Hughes: asked the President of the Board of Trade if he has yet received from the British Embassy in Rome the assurances asked for by the hon. and learned Member for Aberdeen, North, on 29th September, 1954, about the imports by Mr. W. P. Clark, fish merchant, Aberdeen, of monk fish into Italy; if he will explain the delay which has occurred; and if he will now make a statement on the present position relating to this source of foreign currency.

Mr. P. Thorneycroft: The Italian authorities issued on 14th February an instruction to Customs officials to admit

imports of fish without heads provided that the consignments conformed to certain conditions with which the exporters were understood to have no difficulty in complying. I cannot accept the suggestion that any undue delay has occurred. I am not aware that exporters of fish to Italy are now encountering any difficulties but if the hon. and learned Member knows of any, I will look into them.

Mr. Hughes: Does the right hon. Gentleman not remember the long correspondence I had with him about this matter, which ended in his promising to see that the restrictions were abolished permanently, so that this source of international currency might be made of advantage to this country? What is he doing about it now?

Mr. Thorneycroft: The fish, happily, are now coming in without their heads, which is what I think the hon. and learned Gentleman really wished.

Exports to Turkey (Payments Agreement)

Mr. J. R. H. Hutchison: asked the President of the Board of Trade the present position of payments by Turkish buyers of goods exported from this country; and whether he will make a statement.

Mr. P. Thorneycroft: With permission, I will circulate a statement in the OFFICIAL REPORT.

Following is the statement:
Her Majesty's Government concluded with the Turkish Government on 17th January, 1955, an Agreement (Cmd. 9373) whereby the latter have undertaken to set aside for the settlement of outstanding sterling payments due to United Kingdom exporters or merchants at that date for goods (other than petroleum) imported into Turkey sums equivalent to 20 per cent. or, in the case of certain products, 50 per cent. of the sterling earnings of Turkey derived from exports to the United Kingdom. Under the Agreement these sums are to be paid into a special account which is to be opened by the Turkish Central Bank with a London bank and from which payment is to be made to the United Kingdom creditors in an agreed order. The Agreement provides for minimum annual payments of £1,500,000 for each of the years 1955 and 1956 and £2,500,000 for each of the three succeeding years.
The total sums due to United Kingdom creditors for goods (other than petroleum) imported into Turkey are estimated to amount to between £10 million and £12 million.


The Turkish authorities have not yet opened the special account provided for in the Agreement. In response to representations by Her Majesty's Embassy at Ankara they have, however, expressed their intention of doing so as soon as they have resolved certain administrative difficulties. We shall continue to keep in the closest touch with the Turkish Government in this matter.

Pottery (Exports to Australia)

Dr. Stross: asked the President of the Board of Trade whether he has noted the increasing quantities of earthenware and china imported into Australia from Western Germany, Sweden, Italy and Japan during 1954; and what action he proposes to take to enable British manufacturers to sell more British goods generally, and pottery in particular, in Australia.

Mr. P. Thorneycroft: These countries supplied 4 per cent. of Australia's total imports of earthenware and china in 1953 and 8 per cent. in 1954, compared with 94 per cent. and 90 per cent. respectively from the United Kingdom. Subject to an upper limit on imports of chinaware, tiles and other specified goods from Japan, Australian importers are free to use their quotas for imports from any non-dollar source. United Kingdom manufacturers thus have full opportunity to compete for the available market.

Dr. Stross: Is it fair to say that we tend to buy very much less from Australia than Australia buys from us? Can the President say whether it is now not possible for any trading negotiations to be conducted between Britain and any Commonwealth country?

Mr. Thorneycroft: I think it would be hard to secure any trade arrangement which gave us a better chance than getting between 90 and 94 per cent. of the market. I think we had better be satisfied with the situation as it exists.

Furniture Industry

Dame Irene Ward: asked the President of the Board of Trade whether he has considered the representations made to him by the employers' and workers' organisation on the problems created in the furniture-making industry by the restrictions on hire purchase; and what steps he will take to alleviate the short-time working which has arisen.

Mr. Collins: asked the President of the Board of Trade what action he has taken following the representations made to him by the British Furniture Trade Joint Industrial Council in April last, with regard to the recession in the furniture trade.

Mr. P. Thorneycroft: I am considering these representations.

Dame Irene Ward: May I ask my right hon. Friend if he would bear in mind particularly the problem arising out of short-time working, because that is an urgent matter to people engaged in this trade?

Mr. Thorneycroft: I will certainly bear that in mind.

Mr. Collins: Will the right hon. Gentleman bear in mind that it is not only a matter of short-time working but that a high percentage are unemployed, that the masters of Shoreditch are no longer masters because they have no men, and that he has been considering this matter for seven weeks because of difficulties which have arisen entirely through the action of Her Majesty's Government? What is he going to do to alleviate this situation quickly?

Mr. Thorneycroft: The question of the control of credit and other matters will probably fall to be discussed in the debate which we are about to enter upon today. Representations were made to me a fortnight ago upon this subject in detail by both sides of the industry, and I am considering those. I should prefer not to go further than that at this moment.

United Kingdom and Soviet Union

Sir R. Boothby: asked the President of the Board of Trade whether he will give an assurance that licences will be refused for the importation to this country of any canned salmon or crab from the Union of Soviet Socialist Republics until the Government of the Soviet Union have entered into a contract to buy such quantities of cured herring as the British exporters are able to offer, at prices which will secure for our herring fishermen an adequate reward for their efforts.

Mr. P. Thorneycroft: I will certainly bear in mind the representations of my


hon. Friend but I would prefer not to make any statement on negotiations which are currently in progress.

Sir R. Boothby: Will the right hon. Gentleman bear in mind that the original contract with the Soviet Union was based upon the importation by this country of canned salmon and crab, and that if they refuse to take our herrings it looks as if the whole thing will have to fall through?

Mr. Thorneycroft: I will certainly bear that in mind.

Development Areas (New Industrial Units)

Dame Irene Ward: asked the President of the Board of Trade how far he is continuing the policy of encouraging the establishment of new industries on the trading estates under the Distribution of Industries Act; and how far this policy applies to the West Chirton Trading Estate.

Mr. P. Thorneycroft: We encourage the establishment of new industrial units in the Development Areas by all suitable means, including the building of Government-financed factories on the trading estates. Suitable projects for West Chirton would certainly be considered, but there are at present other parts of the North-Eastern Development Area whose need for new industry is more pressing.

Dame Irene Ward: Will my right hon. Friend bear in mind that the possibilities of the trading estate on Tyneside are not being fully explored owing to the fact that we have no date yet for the Tyne Tunnel? Will he have a word with the Minister of Transport on this subject in order that we may develop our new industries, for which it is so important to have modern communications?

Mr. Thorneycroft: I will certainly bear in mind all the points that the hon. Lady has mentioned.

Mr. Chetwynd: Is the President aware that the recent policy of the trading estate companies in more than doubling the rents of these Government factories is having a seriously discouraging effect upon many of the tenants in the area.

Mr. Thorneycroft: It has to be borne in mind that these Government factories are let below the economic rent and that

is one of the factors which is intrumental in attracting industries to these areas. That policy continues.

Mr. S. Silverman: When the right hon. Gentleman is looking round for areas which in his opinion have a prior claim to assisted factories, will he direct his attention to the North-East Development Area in Lancashire, and in particular to the Borough of Nelson, of whose registered unemployed no less than 65 per cent. are employed in one industry, and where the need for diversification is higher than in any other place in the country?

Mr. Thorneycroft: Certainly. Indeed, it was the previous Government which scheduled that area as a Development Area for the purpose of diversifying the industry there. I am also grateful to the hon. Gentleman for reminding us that it is in that area that the biggest factory ever undertaken by a Government in a Development Area was undertaken by a Conservative administration.

Mr. Boardman: Is the right hon. Gentleman aware that one of the overriding troubles with the Distribution of Industry Act is that it empowers no one to distribute industry, and that it was only effective so long as building licences were in operation? Will he do something to amend the Act to bring it into line with current conditions?

Mr. Thorneycroft: The hon. Gentleman will realise that all parties in the House have agreed that the compulsory distribution of industry is something which should not properly be undertaken by Government, and that we should go on continuing to rely upon the various attractions, such as factory building at below economic cost and other methods, rather than resort to compulsion.

Nitrogenous Manures (Supplies)

Mr. Dye: asked the President of the Board of Trade whether he is aware that the supply of nitrogenous manures was insufficient to meet the requirements of farmers in Norfolk during May; and whether he will make a statement on future supplies.

Mr. P. Thorneycroft: Apart from some temporary difficulties during the first days of the railway strike, neither I nor my


right hon. Friend the Minister of Agriculture, Fisheries and Food have had any complaint about shortages in Norfolk, and supplies generally are adequate.

Mr. Dye: Is the right hon. Gentleman aware that the Ministry of Agriculture's executive officer had many complaints, and that one of the big distributors of artificial manures in Norfolk had ordered for May 750 tons, none of which was delivered in May? Did not his right hon. Friend, who spent so much time in Norfolk during May, notice that?

Mr. Thorneycroft: Both I and my right hon. Friend have looked carefully into the matter, and apart from one train load of fertilisers, which was, in fact, held up by the railway strike—a railway strike is bound to cause difficulties of this kind—there do not appear to have been any of the difficulties to which the hon. Gentleman refers. However, if there are points which he would like to put or individual cases to which he would care to draw attention, I or my right hon. Friend, as always, will be very happy to look into them.

Exports to Canada

Mr. de Freitas: asked the President of the Board of Trade what steps he will take to encourage increased exports, especially of engineering products, to Canada.

Mr. P. Thorneycroft: Existing policies are designed to give the fullest assistance to our export trade to Canada. My Department keeps in close touch with exporters and provides a full service of commercial intelligence. The Dollar Exports Council both in this country and in Canada will continue to do everything possible to reinforce our efforts. At the same time the Government are maintaining the conditions of a healthy internal economy which is basic for an active export trade all over the world.

Mr. de Freitas: In spite of all that, why does our trade commission in Canada remain so very small, located chiefly in the older centres of Canada? Are not the new Canadian markets of such great importance that we should adapt ourselves and attempt to get the trade?

Mr. Thorneycroft: Certainly, Sir. If the hon. Gentleman has any suggestions

about that, I should be happy to look into them, as I should be to look into suggestions from other hon. Members.

Mr. Woodburn: Is the right hon. Gentleman aware that there are very big iron-ore developments in Labrador and Hudson's Bay, that that iron ore is nearer Glasgow than the American steel works, and that it is very important that steps should be taken by the Goverinment to link up the export question raised by my hon. Friend with the import of that high-grade quality iron in order to keep the iron industry of this country going?

Mr. Thorneycroft: I certainly agree with that. Anything that can be done, and much has been done, on both sides of the Atlantic to foster trade both ways, between Canada and ourselves, is obviously healthy for the export trade of the United Kingdom.

Mr. Stokes: Is the right hon. Gentleman doing anything to suggest to manufacturers that they should jump the queue with regard to deliveries? Deliveries in Canada are becoming even more important than they ever were because American deliveries are getting better. It is impossible to increase the export of capital goods to Canada unless we jump the queue at this end.

Mr. Thorneycroft: No one will realise more than the right hon. Gentleman himself that the question of priorities is a matter in the last resort for industrialists to decide for themselves.

Mr. de Freitas: On a point of order. In view of the unsatisfactory nature of the right hon. Gentleman's reply, I give notice that I shall try to raise the matter on the Adjournment.

Oral Answers to Questions — NATIONAL FINANCE

Motor Cyclists (Crash Helmets)

Sir I. Clark Hutchison: asked the Chancellor of the Exchequer if, in order to reduce the number of fatal accidents to motor cyclists, he will encourage the wearing of crash helmets by taking steps to abolish Purchase Tax on this form of protective headgear.

Mr. Ian Harvey: asked the Chancellor of the Exchequer whether he will now remit Purchase Tax on motor cyclists' crash helmets.

Captain Pilkington: asked the Chancellor of the Exchequer whether, in view of the fact that the British Standards Institution had laid down a special specification of crash helmets for civilian use, he will now exempt these from Purchase Tax.

The Financial Secretary to the Treasury (Mr. Henry Brooke): I would refer my hon. Friends to the replies which my right hon. Friend the Chancellor of the Exchequer gave on Tuesday to similar Questions on this subject.

Sir I. Clark Hutchison: Will my right hon. Friend bring to the notice of the Chancellor the importance of this matter and ask him to look at it again with a view to reducing the casualty rate among motor cyclists?

Mr. Brooke: I can assure my hon. Friend that the Chancellor has not forgotten what he said or what was said by hon. Members two days ago.

Captain Pilkington: In view of the opinion expressed on all sides of the House, and also in view of the fact that on principle it is bad to tax something which helps towards safety, will my right hon. Friend reconsider the matter?

Mr. Brooke: This is only one item in a large range of protective clothing. It costs quite a lot of money to buy a motor cycle, and the additional Purchase Tax adds to the cost of the crash helmet less than the cost of a gallon and a half of petrol.

Lieut.-Colonel Lipton: Will the right hon. Gentleman say what are the difficulties which make it impossible for the Chancellor to distinguish crash helmets from other forms of protective clothing, because that is the argument which has been used for not doing anything in the matter?

Mr. Brooke: No, Sir, that is not the argument which has been used. It is the argument which was attributed to the Government by a certain individual. It has never been used on behalf of the Government.

Mr. Chapman: asked the Chancellor of the Exchequer why nearly six months have passed without a reply being sent to a deputation which visited the Customs and Excise Department to urge

the removal of Purchase Tax on cycle crash helmets; and what reply is now being sent.

Mr. H. Brooke: I assume the hon. Member has in mind the deputation from the British Medical Association received last January by the Customs. A full reply was sent to the Association on 17th January explaining why the Government were unable to make a special tax exemption for crash helmets.

Purchase Tax (Protective Clothing)

Mr. John Hall: asked the Chancellor of the Exchequer if he will take steps to remove Purchase Tax from all protective clothing.

Mr. H. Brooke: This suggestion has been considered on many occasions, but found to be impracticable.

Mr. Hall: Does not my right hon. Friend think it is a little illogical to discourage the purchase of protective clothing by imposing a tax, the proceeds of which are likely to be swallowed by the cost to the nation of the casualties which will arise?

Mr. Brooke: If my hon. Friend will look at the debates in 1940—[HON. MEMBERS: "Oh."]—he will see that there was a prolonged debate on the very question which he raises here, which is whether it is possible to exempt from tax all protective clothing as a class. That has been thoroughly investigated, and it is not possible. The phrase "protective clothing" would extend so far as to include ordinary mackintoshes.

Mr. H. Morrison: Are we to understand from the right hon. Gentleman's two replies, first, that the tax on crash helmets, for the removal of which I should have thought there was a strong case, cannot be removed because the whole question of protective clothing might be involved, and then, faced with that, the right hon. Gentleman says he cannot do it because protective clothing cannot have the tax removed? Is there not a little lack of logic between the two answers?

Mr. Brooke: Successive Governments have taken the same view on this and have accepted the view that protective clothing cannot be exempted as a class. My right hon. Friend told the House two


days ago that he was not yet convinced that motor cyclists were deterred from using crash helmets by the small amount of tax involved.

Mr. Isaacs: Will the right hon. Gentleman say whether a mink coat comes under the heading of protective clothing?

Mr. Brooke: Not so far as I am aware.

Souvenir Gifts (Customs Duty)

Mr. G. Jeger: asked the Chancellor of the Exchequer whether he is aware that watches presented to players of a London Association Football team by Basle City Federation were confiscated by Customs officials at London Airport; and whether he will waive the duty in this case so that the team may receive their souvenir gifts.

Mr. H. Brooke: Souvenir gifts are not exempt from Customs duty, and these watches were held in Customs charge pending appeal; they were not confiscated. I now understand that the watches were formally presented on a public occasion commemorating the friendly relations between the cities of London and Basle, and in these special circumstances I have agreed to waive payment of duty.

Mr. Jeger: Might I, on behalf of the London Football Association, express thanks to the Treasury for that gesture? Is the right hon. Gentleman aware that that gesture has done far more for international friendship than sending the Foreign Secretary off on conferences?

Cost of Living

Mr. Lewis: asked the Chancellor of the Exchequer if he will publish, as a White Paper, his plan for reducing the cost of living.

The Economic Secretary to the Treasury (Sir Edward Boyle): I would refer the hon. Member to the reply which my right hon. Friend the Chancellor of the Exchequer gave to the hon. Member for the Itchen division of Southampton (Dr. King) on 14th June.

Mr. Lewis: Yes, Sir, but I do not believe the answer—[HON. MEMBERS: "Nor do we."]—which the Minister gave had any reference to the suggestion of a White Paper dealing with the Government's plan. For three years the Government have been promising to do this

but we have not seen any of the effects of it yet. Perhaps it is because the Government have not got a plan, and, therefore, cannot issue a White Paper.

Sir E. Boyle: My right hon. Friend said the day before yesterday that positive reductions in the cost of living must come from reductions in costs and from increases in productivity. One does not need a White Paper to make that point clear.

Bank Advances (Nationalised Industries)

Mr. Grimond: asked the Chancellor of the Exchequer what guidance he has given to the banks about advances to the nationalised industries.

Sir E. Boyle: None, Sir.

Mr. Grimond: Is not certain advice given to the banks about advances in general, and at the moment are not the nationalised industries very heavily in debt to the banks? Is it the policy of the Government that their long-term needs should be financed in this way?

Sir E. Boyle: It is not the present practice of my right hon. Friend in general to give the banks guidance on the attitude which he would wish them to adopt towards individual industries. The banks are aware of the essential nature of the services provided by these industries and, on the other hand, of the desirability of avoiding an undue expansion of advances generally.

Mr. P. Noel-Baker: Would the hon. Gentleman say that the Government's proposals for massive investment programmes of £2,000 million for electricity and £1,200 million for the railways constitute a very striking vote of confidence in the efficiency of the nationalised industries?

Income Tax (Travel Expenses)

Mr. J. M. Howard: asked the Chancellor of the Exchequer whether he will make suitable income tax concessions to enable people incurring additional expenses in travelling to and from their work as a result of the railway strike, to claim these expenses as deductions for Income Tax purposes.

Mr. H. Brooke: No, Sir.

Mr. Howard: Is the right hon. Gentleman aware that many business firms hired transport to convey their employees to and from work? Do his officers intend to assess the benefit to those employees? If not, is there not unfair differentiation between one firm and another?

Mr. Brooke: That goes rather beyond the scope of the original Question, but the Royal Commission on Taxation of Profits and Income has lately endorsed the standard view that the cost of travelling to work should not be allowed as an Income Tax deduction. We should get into a great deal of trouble if we added a lot of special reliefs for temporary contingencies of this kind.

Iron and Steel (Price-fixing Rings)

Mr. G. R. Strauss: asked the Chancellor of the Exchequer (1) what steps he has taken to ensure that companies whose shares are held by the lion and Steel Holding and Realisation Agency do not participate in price-fixing rings in tendering for structural steel erections or similar activities;
(2) how many of the companies recently quoting the same price for delivery and erection of structural steel to the London County Council are under the control of the Iron and Steel Holding Realisation Agency.

Mr. H. Brooke: It is the normal practice for matters of a commercial character to be left to the discretion of the companies themselves, so that companies whose shares are held by the Agency are, as far as possible, on the same footing as privately-owned companies. I am informed that one such company put in a quotation to the London County Council on the occasion in question.

Mr. Strauss: Is the Minister aware that under the nationalisation provisions which we brought in any Government could give directions to the steel industry on any matter of public and national interest? Does he not agree that this recent practice, as shown by these tenders, is an exploitation of the public? Is not the fact that these firms are putting in identical tenders one of the inevitable and consequential evils resulting from the denationalisation of the steel industry?

Mr. Brooke: The relationship between the Government and the steel industry has been deliberately altered by this House during the term of the last Parliament. I am not aware of any practice of this kind in the industry which did not exist in the time when the steel industry was nationalised.

Mr. Strauss: Is the right hon. Gentleman aware that if such practice had come to light—and it was never reported and I do not know that it existed—it could have been immediately stopped by Parliament through the Minister of Supply ordering the industry not to do anything so contrary to the public interest?

Mr. Brooke: I think that what the right hon. Gentleman is now saying is that he was not knowledgeable enough to carry out his duties.

Mr. Stokes: While not disagreeing with what my right hon. Friend implied in his question, may I ask the right hon. Gentleman whether the public interest would be more properly safeguarded if in these cases when identical tenders are put in, for reasons which I perfectly understand, the successful tenderer was bound ultimately to submit a certificate of costs showing the amount of profit which he had made and, if there were more than a certain amount, it should be deducted from the contract price?

Mr. Brooke: The President of the Board of Trade told the House a few minutes ago that he proposed to refer some of these matters to the Monopolies Commission. The best thing is for the Monopolies Commission to investigate the whole subject.

Currencies (Convertibility)

Mr. Warbey: asked the Chancellor of the Exchequer what decisions were taken at the recent Organisation for European Economic Co-operation meeting regarding the modification of the European Payments Union and preparations for the free convertibility of currencies.

Sir E. Boyle: I would ask the hon. Member to await the statement which my right hon. Friend will be making in the course of the debate.

Mr. Warbey: Pending that statement, can we have an assurance that the


Government have no early intention of proceeding towards the free convertibility of sterling?

Sir E. Boyle: I advise the hon. Member to await my right hon. Friend's speech. There will be a full statement on this subject.

Savings Certificates

Mr. Woodburn: asked the Chancellor of the Exchequer whether, under his regulations, the maximum of Savings Certificates is technically exceeded if and when these are not cashed at their expiry date and whether interest continues to he paid after certificates have completed the appointed term.

Mr. H. Brooke: The answer to the first part of the Question is "No, Sir." As to the second, interest is continuing to be paid on certificates of all issues.

Mr. Woodburn: Will the right hon. Gentleman take steps to make this better known, because quite a number of people seem to be in doubt? When their certificates are exhausted, having reached the date of expiry, they feel that they must withdraw them. Might it not help the Savings Certificates campaign very much if they knew that, if they left them, interest would continue?

Mr. Brooke: I do not think that there is widespread misunderstanding on this point. The details are given in the Post Office Guide, I think the right hon. Gentleman will find, and in leaflets issued by the Post Office and the National Savings Committee. I do not see what more we can do.

Mr. Woodburn: I have made a helpful suggestion. Does the right hon. Gentleman think that the mass of the public ever reads the Post Office Guide? I doubt whether he has ever read it. People in offices sometimes have to study it, but it is like a Government Blue Book. I suggest that there could be a simpler method of reaching the ordinary person than that.

Mr. Brooke: I do not know that they would read any additional literature which I might produce.

Exchange Equalisation Account

Mr. Grimond: asked the Chancellor of the Exchequer what the cost, over the last two months, has been to the Equalisation Account in gold and dollars for the support of transferable sterling.

Sir E. Boyle: It would not be in the public interest for me to disclose the operations of the Exchange Equalisation Account.

Mr. Grimond: Does that answer mean that no statistics will be made available to show whether this new policy of the Chancellor's in the spring is successful or not?

Sir E. Boyle: No figures showing the operations of the Exchange Equalisation Account have ever been published. We do not believe that it would be in the public interest to disclose them.

Road Programme (Finance)

Viscount Hinchingbrooke: asked the Secretary to the Treasury what further consideration has been given to borrowing by both the central Government and local authorities in order to implement the road programme at the earliest practicable date.

Mr. H. Brooke: Local authorities can and do borrow regularly for building roads. The central Government are in a position to carry such expenditure on the Budget in present conditions, although as the programme builds up to its maximum rate the burden will of course increase, and we may then have to review the method of financing it.

Receipt Stamps (Postal Franking Machines)

Mr. John Hall: asked the Secretary to the Treasury if he will allow the use of postal franking machines for the stamping of receipts.

Mr. H. Brooke: No, Sir. I am afraid the danger of forgery, with consequent loss of revenue, is too great.

Mr. Hall: Can my right hon. Friend explain how there is a greater danger of forgery in using the machine for these purposes than in using it for ordinary letter mail?

Mr. Brooke: Yes, because the postal franking of the ordinary letter has only a short-term use. It may be necessary to keep a receipt for years. Postal franks will be examined almost immediately by the Post Office, whereas a forged form of receipt might not come to anybody's notice for a very long time.

Oral Answers to Questions — AGRICULTURE, FISHERIES AND FOOD

Meat Inspection

Mr. H. Hynd: asked the Minister of Agriculture, Fisheries and Food whether he is yet in a position to issue regulations providing for charges to be made by a local authority for the inspection of meat: or, alternatively, whether he will allow local authorities to adopt byelaws in respect of private slaughterhouses.

The Minister of Agriculture, Fisheries and Food (Mr. D. Heathcoat Amory): As the hon. Member knows, I am awaiting the report of the Interdepartmental Committee on the Siting of Slaughterhouses before coming to a decision on this matter. I hope to receive the report shortly.

Mr. Hynd: Is the Minister aware that I have had to put down this Question several times already? Can he say how often I shall still have to put it down?

Mr. Amory: I do not at all resent the hon. Gentleman's prodding, because I am as anxious as he that we should find a solution to this problem. I assure him that I feel no inclination to stall in reaching a decision as soon as we can, and I hope to receive the report next month.

Mr. T. Williams: Is the Minister satisfied that there is adequate inspection of meat killed in these 4,500 new slaughterhouses?

Mr. Amory: I do not regard the present slaughterhouse position as entirely satisfactory in a number of respects and that is why I am very anxious to receive the report of this Interdepartmental Committee.

Myxomatosis

Mr. Hurd: asked the Minister of Agriculture, Fisheries and Food what evidence he has received that rabbits in

some districts have developed immunity to myxomatosis.

Mr. Amory: My Department has examined surviving rabbits from many parts of the country, and of these 39—or about 10 per cent.—were found to have acquired immunity to myxomatosis. It is not, however, possible to say whether this proportion is representative for the country as a whole.

Mr. Hastings: Is there any evidence that this immunity is carried to the next generation?

Mr. Amory: I understand not, except possibly for the first few weeks of a young rabbit's life.

Rabbit Clearance Areas

Mr. Hurd: asked the Minister of Agriculture, Fisheries and Food what progress is being made in establishing rabbit clearance areas; and if he will list the counties where effective arrangements have already been made.

Mr. Amory: Fourteen Orders have so far been made designating rabbit clearance areas totalling some 430,000 acres in 8 counties, namely: Anglesey, Bedfordshire, Cheshire, Essex, Norfolk, Northumberland, Shropshire and Worcestershire. Twenty-eight notices of proposal to make an order have also been published affecting a further 848,000 acres in 17 other counties and an additional 273,000 acres in Norfolk.

Mr. Hurd: Can my right hon. Friend foresee that in the next few months every county will have rabbit clearance orders in operation in suitable parts?

Mr. Amory: Every county, I know, has this matter under consideration at present, and I am really quite encouraged by the progress made in the past few months.

Oral Answers to Questions — "THE COMMONWEALTH AND NUCLEAR DEVELOPMENT"

Mr. Ellis Smith: asked the Prime Minister (1) if he will have published for the Atoms for Peace Exhibition to be held in Geneva the full story up-to-date of our


contribution and the part played by Lord Rutherford, C. R. Burch, T. E. Allibone, T. S. Walton, Sir John Cockcroft, J. D. Craggs, N. Elce, H. Smethhurst and M. E. Haine; and if he will arrange that the language be as simplified as possible and printed in all languages where there will be a demand for the publication;
(2) if he will now have published a full report on the English contribution made under Government auspices towards splitting the atom, on the Trafford Park designed and built prototype machines for the atomic bomb project, the dates upon which Dr. Allibone left Manchester for the purpose of taking charge of the British and United States scientists at the University of California, on who introduced the electro-magnetic method of separating uranium isotopes and on other historic and informative information that will give the credit where it is due so that it will be on record for the future.

The Prime Minister (Sir Anthony Eden): A book entitled "The Commonwealth and Nuclear Development," designed for those of us who are not specialists, has been prepared by the Central Office of Information. I hope that it will be available in time for the Geneva Conference on the Peaceful Uses of Atomic Energy. The book will be on sale in this country through Her Majesty's Stationery Office, and is being distributed abroad free of charge by the United Kingdom Information Offices in English, French and Spanish. This book gives an up-to-date account of the British contribution to nuclear research.
Some details of the United Kingdom contribution during the years 1939 to 1945 were given in official statements released in 1945. British developments in atomic energy have been reported in a number of publications since then. In addition a considerable amount of information of a more technical nature has already been published. I do not think that any further official publication is required at this time.

Mr. Smith: While welcoming that reply, provided that it gives credit where it is due to the number of British scientists who made such a valuable contribution prior to the Americans taking advantage of our research, what I should like to ask the Prime Minister is this: does he agree with me that the world is

on the eve of a mid-20th century revolution in the production of power, and, if so, does he agree that British scientists and engineers could take the initiative in the world in this, provided that they have encouragement and financial support; and, therefore, will he give attention to this so that our scientists and engineers may be given the support they deserve?

The Prime Minister: I do not think that I would dispute anything that the hon. Gentleman said just now. The House as a whole will endorse it. That is why we have tried to put this out in a popular form, which I think will be effective and I think meets the need which the hon. Gentleman himself has in mind.

Oral Answers to Questions — NATIONAL SERVICE

Mr. Dodds: asked the Prime Minister if he will arrange an immediate inquiry into the possibility of reducing the period of National Service in the Armed Forces.

The Prime Minister: I have nothing at present to add to my statement in the debate on National Service in this House on 28th April last.

Mr. Dodds: Does not the Prime Minister appreciate that there is a growing feeling that this country is carrying too big a burden as compared with some of our friends in Europe? Is not he aware that there is a feeling that an inquiry should be held? Why should he resist that at a time when the Americans have announced a reduction in their armed forces?

The Prime Minister: I can understand that there should be concern and interest in this matter. As I explained in the debate, and as I also explained during the General Election, I do not consider that, on the eve of going into a conference with a Power that has three years' national service, that is the best time at which to suggest a reduction in our own.

Oral Answers to Questions — COLONIAL AFFAIRS

Mr. J. Johnson: asked the Prime Minister whether, in view of the growing volume and complexity of Colonial affairs, particularly in the African continent, he will consider recommending the appointment of an additional Minister of State.

The Prime Minister: I do not contemplate any such appointment at the present time.

Mr. Johnson: May I ask the right hon. Gentleman to think again about this matter, because 12 months ago we had no Minister at all in the House and we had to have Questions answered by the Minister responsible for Commonwealth Relations? Is the Prime Minister aware that at least four delegations from Uganda—one Colony alone—are in the country? If he will not listen to me, will he look at his colleague the Secretary of State for the Colonies and think of his health in the future with all this work?

The Prime Minister: I assure the hon. Gentleman that I have given thought to this matter. It is the almost universal experience of Ministers that they are hard worked—at least, I hope so—in this Administration.

Mr. Dugdale: Will the Prime Minister bear in mind that there are a very large number of remote territories scattered all over the world which never receive a visit from any Member of Her Majesty's Government; that it is most desirable that they should receive such visits, and that they cannot receive them unless there are sufficient Ministers?

The Prime Minister: I agree with the right hon. Gentleman. I am as much in favour of such journeys as he is. On the other hand, one has to strike a balance between the duties to be performed and the number of Ministers which this House would willingly tolerate.

Oral Answers to Questions — FOUR-POWER TALKS

Mr. Zilliacus: asked the Prime Minister whether he will give an assurance that it will be the policy of Her Majesty's Government in the impending four-Power talks to conduct the negotiations on the basis of respect for the national independence and equal rights, and non-interference in the internal affairs, of all the States concerned, in accordance with the principles laid down in Article 2 of the United Nations Charter.

The Prime Minister: The policy of Her Majesty's Government is always framed in accordance with the principles of the United Nations Charter.

Mr. Zilliacus: Will the Prime Minister convey the sense of this reply to Mr. John Foster Dulles, the United States Secretary of State, in view of the fact that his publicly announced intention of using the four-Power talks to press for changes in the internal regimes of some of the East European States runs counter to this assurance, is inconsistent with the Charter, and bids fair, if persisted in, to wreck the negotiations?

The Prime Minister: I think that if we are going to go into these matters at all, we should also have to bear in mind that certain assurances about the rights of these countries freely to express their views were given at Yalta, and some people might have views as to how well they have been fulfilled.

Oral Answers to Questions — UNDER-SECRETARY OF STATE FOR SCOTLAND

Mr. Rankin: asked the Prime Minister when he proposes to appoint a third Under-Secretary of State for Scotland.

The Prime Minister: The hon. Member will by now have seen the announcement of the appointment of my hon. Friend the Member for Dumfries (Mr. N. Macpherson) as Parliamentary Under-Secretary of State for Scotland.

Mr. Rankin: I have seen that, and the Prime Minister will be aware that the Question was submitted before the appointment was made; but, as a matter of information, will he tell us whether the hon. Gentleman concerned has resigned his post as Chief Whip to the three members of the National Liberal Party who sit on the back benches opposite?

The Prime Minister: It is not unusual for us to include members of the National Liberal Party in our Ministerial ranks. If I may say it to the hon. Gentleman, perhaps the difference is that hon. Members opposite have one name and several loyalties: we have several names and one loyalty.

Oral Answers to Questions — INDUSTRIAL CO-PARTNERSHIP AND PROFIT SHARING

Mr. Woodburn: asked the Prime Minister what steps the Government propose to take towards the realisation of his policy of making the workers shareholders in industry.

The Prime Minister: The Government are glad to see the development of schemes of co-partnership and profit sharing. As has been stated, the adoption of such schemes is essentially a matter for industry. Opportunity will be taken, whether in the course of the debate on the Address or on later occasions, to give indications of the extent to which Her Majesty's Government can help.

Mr. Woodburn: Is the right hon. Gentleman aware that I listened to his last broadcast during the Election? I gathered the impression that the right hon. Gentleman had some Government policy about this matter, and I hoped that he would be able to make a pronouncement, because what he has said just now has been the common policy of all Governments for about 100 years—that industry could do this if it liked—but he announced it as Government policy on the eve of the Election. Perhaps he could explain what he meant.

The Prime Minister: I am very grateful to the right hon. Gentleman for the compliment he paid me in the first part of his supplementary question. As regards the second part, I am equally glad if we may understand that we have the support of the party opposite in any proposals which we may from time to time find it helpful to put forward to assist industry in schemes of co-partnership.

Oral Answers to Questions — THERMO-NUCLEAR BOMB TESTS

Mr. P. Noel-Baker: asked the Prime Minister whether he has considered the evidence, which is in his possession, confirmed by Dr. Willard Libby, of the United States Atomic Energy Commission, and by Dr. Ralph Lapp, formerly one of the Commission's chief physicists, that the so-called hydrogen bomb exploded at Bikini was, in fact, a radically new type of bomb, the fall-out effects of which may cover 100,000 square miles, and may last for two months, and that such bombs of almost limitless size may now be made at relatively low cost; and whether, in the light of these facts, he will propose at the Geneva Conference next month that all tests of thermo-nuclear bombs shall be suspended while the

United Nations discussions on disarmament are going on.

The Prime Minister: I am aware of the reports to which the right hon. Member refers and the suppositions which are made with regard to the effects of the thermo-nuclear bomb exploded at Bikini. These statements are, of course, based on theoretical calculations, whereas the Report issued by the United States Atomic Energy Commission on 15th February this year is based on actual measurements of effects and observed phenomena. Among points of difference is the size given for the contaminated area. The Commission's Report states that about 7,000 square miles were contaminated by fall-out—a large enough figure—and not 100,000 square miles, as asserted in the Question.
With regard to the last part of the right hon. Gentleman's Question, I am sure that he will understand that I cannot anticipate the proposals which may be made at the forthcoming Conference in Geneva.

Mr. Noel-Baker: Is it not the fact that a member of the Atomic Energy Commission, Dr. Libby, has now confirmed the statement made by independent scientists some time ago about the nature of this new and much more dangerous bomb? That being so, would it not be wise to listen to the warnings of these famous scientists about the long-distance genetic dangers of continuing tests? Is the Prime Minister aware that an American scientist, Dr. Miller, has estimated that perhaps 80,000 people have already suffered harmful genetic effects? Will he not at least put forward this proposal?

The Prime Minister: I entirely agree that this is a matter the seriousness of which cannot be lost sight of at any time. But it is arguable whether this is the best means of conducting any discussions which we may have about a disarmament conference or whether there are not proposals of a slightly more far-reaching character which would give the world a greater measure of security.

Mr. Strachey: Does not the Prime Minister realise that if only he would make it the policy of Great Britain to obtain some sort of standstill arrangement on further tests, he would get an overwhelming amount of world opinion


behind this country? Does not he further realise that, even apart from all questions of the contamination of the atmosphere, which may or may not be taking place, an agreement even of this limited character would be taking one step in the direction of nuclear disarmament which would be valuable, and that it is practical because it is self-policing?

The Prime Minister: I can assure the right hon. Gentleman that I have given a great deal of thought to this matter over the last year. It is a question of whether, in an attempt to get a disarmament agreement, this is the best way to set about it, or whether there are not other proposals which would be more effective.

Mr. A. Henderson: In addition to the obvious advantage of waiting for the result of this conference which may further the long-term objective of disarmament, would not the Prime Minister agree that the different opinions expressed by the various scientists in this and other countries only strengthens the case put forward for an independent investigation by scientists under the aegis of the United Nations? Why cannot we have such a scientific investigation?

The Prime Minister: I think that that has been discussed before, and there are certain difficulties, as the right hon. and learned Gentleman knows. There is the extent to which some scientists, from some countries at any rate, would in fact have the kind of independence to which the right hon. and learned Gentleman referred.

BUSINESS OF THE HOUSE

Mr. Attlee: May I ask the Lord Privy Seal to state the business of the House for next week?

The Lord Privy Seal (Mr. Harry Crookshank): Yes, Sir. The business for next week will be as follows:
MONDAY, 20TH JUNE—Second Reading: German Conventions Bill, which it is hoped to obtain by about 7 o'clock.
Second Reading: Aliens' Employment Bill.
Motion to refer Food and Drugs (Scotland) Bill to the Scottish Standing Committee for Second Reading.
TUESDAY, 21ST JUNE—The Government are affording an opportunity for a debate on Colonial Affairs.
WEDNESDAY, 22ND JUNE—Second Reading: Agriculture (Improvement of Roads) Bill.
Committee stage: Money Resolution.
Motions to approve: Draft Amendments of the Milk Marketing Scheme.
Draft Calf Subsidies (England, Wales and Northern Ireland) (Variation) Scheme and a similar Scheme for Scotland; and the Cereals (Deficiency Payments) Order.
THURSDAY, 23RD JUNE—Debate on Industrial Relations on the Motion for the Adjournment of the House.
FRIDAY, 24TH JUNE—Second Reading: County Courts Bill.
Committee stage: Money Resolution.

H.M. SUBMARINE "SIDON" (ACCIDENT)

The First Lord of the Admiralty (Mr. J. P. L. Thomas): I regret to inform the House that at 8.25 this morning there was an explosion in a torpedo in H.M.S. "Sidon" at Portland as she was lying alongside her parent ship H.M.S. "Maidstone." She had embarked torpedoes and was about to go to sea for firing practices.
There was a sudden uprush of air and smoke through the conning tower hatch and survivors started to escape. The captain and other officers and men who were on the bridge of the submarine, as well as officers from H.M.S. "Maidstone," entered the submarine to assist in rescue operations. At 8.45, while these were in progress, the submarine sank very quickly by the bow.
I regret to say that 3 officers and 10 ratings are definitely known to be missing and must be presumed dead. In addition, 1 officer and 7 ratings were injured and are in hospital. Action has been taken to inform the next-of-kin.
The submarine is now lying on the bottom, in 36 feet of water. Salvage operations are in progress under the personal direction of the Flag Officer, Submarines. A full inquiry will, of course, be held.
The House will wish me to express the deepest sympathy for those bereaved and injured in this accident.

Mr. Callaghan: The First Lord carries all of us on this side of the House with him in his expression of sympathy to the next-of-kin of those who have been bereaved, and to the injured. It is the suddenness with which death comes on occasions like this that makes the burden of all those concerned in the operation so difficult to bear. We shall await the report of the court of inquiry, but may I ask this of the right hon. Gentleman about those who have lost their lives: did the loss of life occur in the explosion, or was it because they were unable to abandon ship quickly?

Mr. Thomas: So far as my information goes at present, I think that the loss of life is likely to be entirely due to the explosion.

BILL PRESENTED

INTERNATIONAL FINANCE CORPORATION

Bill to enable effect to be given to an international agreement for the establishment and operation of an International Finance Corporation, and for purposes connected therewith, presented by the Chancellor of the Exchequer; supported by Sir Edward Boyle and Mr. Anthony Nutting; read the First time; to be read a Second time upon Monday next and to be printed. [Bill 10.]

Orders of the Day — QUEEN'S SPEECH

DEBATE ON THE ADDRESS

[SIXTH DAY]

Order read for resuming adjourned debate on Question—[9th June]:
That an humble Address be presented to Her Majesty, as followeth:
Most Gracious Sovereign,
We, Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom of Great Britain and Northern Ireland, in Parliament assembled, beg leave to offer our humble thanks to Your Majesty for the Gracious Speech which Your Majesty has addressed to both Houses of Parliament.

Question again proposed.

3.38 p.m.

Mr. Hugh Gaitskell: I beg to move, at the end of the Question, to add:
but humbly regret that the measures set forth in the Gracious Speech are not calculated to achieve full employment, stable prices, peace in industry and an adequate surplus in our overseas payments, or to bring about a more equitable distribution of wealth among Your Majesty's subjects.
The Gracious Speech can, I think, be fairly described as a catalogue of relatively minor or non-controversial measures interspersed with pious resolutions and platitudes on matters of greater importance. This afternoon we are concerned with some of the matters of greater importance, as, indeed, we were yesterday. We are concerned with economic affairs.
As the resolutions and platitudes mean so little, I think we need not bother very long with them, but I must draw the attention of the House to one sentence to which I will award the first prize. It is the sentence at the top of page 3 of the Gracious Speech, and it reads as follows:
They"—
that is, "My Ministers"—
are convinced that, with a steady expansion of production in industry, commerce and agriculture, an ever higher standard of living can be secured for the whole nation.
I congratulate the Government on their caution. They are not absolutely certain that it will be secured, but it may be secured so long as we do have a rising level of production. If the Foreign


Secretary has, so far, taken first prize for platitudes in this debate, this particular sentence, I think, may be awarded the first prize in the Gracious Speech.
I should like to ask a question about the previous sentence, which reads:
To this end they will actively seek the co-operation of employers and workers in ensuring that full employment and expanding output shall not be jeopardised.
May I ask the Chancellor to say whether that implies a new departure so far as the Government are concerned? Do they contemplate some new machinery for encouraging higher productivity, or is it simply a sentence relating to the present disturbed state of industrial relations, or, again, does the right hon. Gentleman envisage a new form of co-operation between both sides of industry and the Government?
There are certain aims of economic policy about which I do not think we need argue. We are all in favour of full employment. We all want to see a substantial surplus on our balance of overseas payments. We all want stable prices and the avoidance of inflation. We all want industrial peace, and, of course, we all want rising productivity and higher living standards. These are common aims, and I am sure the Government would agree that they are their aims just as much as those of the Opposition. Where we disagree, however, is over the Government's policy—so far as we understand it—to achieve these aims. We on these benches do not believe that the policy of laissez faire, or, to give it its more recent title, "Conservative freedom," will produce these results. That is our first major point of disagreement with the Government.
Our second difference is even more fundamental. Our economic aims are not simply to raise output, to get as much production as possible, to have as smooth-working an economy as is feasible. We are also concerned to see that the output which is produced is fairly distributed. We believe that this is right in itself, and we also hold the view that, unless this happens, the possibility of achieving those other aims is seriously jeopardised. These are the two major differences between the parties in the field of economic policy, and our Amendment, as is proper on such occasions, seeks to express this

disagreement in the fewest possible words.
I will mention three other points by way of explanation. I hope that hon. Members opposite will not put forward the argument that one does not, of course, include everything in the Gracious Speech and that, perhaps, the Government are going to do some things outside the Speech. I do not think that in this case the omissions from the Gracious Speech are in any way an accident, because the Government do not believe in a positive Government policy for economic expansion. They believe in allowing industry to go freely ahead—or so I have always understood—but not to control it, not to guide it and not to stimulate it.

Brigadier Terence Clarke: A very good thing.

Mr. Gaitskell: I am glad to have the corroboration of the hon. and gallant Gentleman about the views of the Conservative Party. Hon. Members opposite do not think that they need any policy except for just one thing, and, to be fair, I must mention it. They believe in one control, that is, the control through monetary policy, the control of credit and the control of the Bank Rate. This is the sole instrument on which they now rely to keep the economy on an even keel.
On our side—and this is the other point of explanation—I want to make it plain that we are not saying in this Amendment, nor have we ever said, that none of these various aims can be achieved. What we are saying is that if the Government rely exclusively on monetary policy, then we do not believe it is possible for them to achieve all these aims. One may, for example, very easily achieve a situation of full employment. In my view, that is not particularly difficult providing one is prepared to use the instrument of credit control very freely and certainly if one is prepared to use budgetary policy as well. In that case, I would not say that it is a particularly difficult task. But what is beyond the power of the Government, if they rely solely on monetary policy, is to achieve at the same time not only full employment, but an absence of inflation, good industrial relations and a large surplus on our overseas balance of payments.
I propose to argue this case, first, by reference to past events and then by reference to the immediate future prospects. I shall not spend very long over the past three years, because both in this House and in the country we have argued these matters at very great length. The facts and the figures have already been thoroughly deployed, and I will content myself with a summary because, of course, it is relevant to the arguments which I am putting forward.
No one will deny that during the past three years, apart from the period in 1952, substantially the country has had full employment. But when we turn to the other aims, the achievements are not so obvious. First of all, the balance of payments surplus. I do not think that the Chancellor could possibly say, or would say, that what we have had in these last three years by way of a surplus is in the least adequate to our requirements. On more than one occasion the right hon. Gentleman has stated that we ought to be earning a surplus of £300 million a year, and we on this side accept that figure. It is not just an accidental figure. It is based on an examination of our needs, and, as the House knows very well, our needs are, first, to repay our debts, secondly, to build up our gold reserves, and, thirdly, to make sufficient funds available for investments and for grants abroad.
I was sorry to hear the Joint Under-Secretary of State for Foreign Affairs implying only the other day that we were not able to make any further progress with the conception of a world development fund. He was, as I understood it, making any further action by the Government dependent upon a reduction in armaments. I should have thought that we might have gone ahead rather faster without waiting for the hoped for reduction in armaments.
But, in all fairness, I must say that it is not much use making proposals and offers that we will contribute whatever it may be—1 per cent. of our national income is one of the figures suggested—to underdeveloped territories unless we can make it available in the form of a surplus of goods and services on our balance of payments.
The only other point on the balance of payments in these last three years

which I must underline is that when we fail to achieve this surplus, then either we cannot make the investments or we cannot build up our reserves, or, again, we are forced into the position of borrowing short and lending long. As a matter of fact, over these last few years we have, to some extent, been doing all three of these things.
Speaking, I think at Newcastle, during the Election, the Chancellor said, on 14th May:
We intend to make our export trade the first charge on our resources.
That, of course, is exactly what the Labour Government did between 1945 and 1951, but, if I may say so, it is exactly what the Chancellor did not do during the last three years, when there was a substantial increment of production even if it was lower than the increment of production under the Labour Government. But only a tiny fraction of it went towards increasing exports.
I now pass to the record as far as prices are concerned. The facts given are well known and we need not delay long upon them. The cost of living has gone up in the last three years by 10 per cent., or 2s. in the £. Food prices have risen by about 20 per cent., or 4s. in the £.
All of this might have been said to be due to unusually unfavourable external conditions. If we had had to pay much more for our imports, we can all understand that that would have created serious difficulties for the Government in achieving these aims. It would create the difficulty not only that our imports bill would be substantially larger because of the terms of trade being against us, but it would also create great difficulties so far as the price level at home is concerned.
One cannot easily have a sharp rise in material and commodity prices without the impact being felt at home. But, of course, as hon. Members know, so far as the last three years are concerned, just the opposite is true. Import prices fell by about 15 per cent., or 3s. in the £, during those years. The terms of trade were, accordingly, heavily in our favour.
I make only one comment, just to bring the point home. Let hon. Members ask themselves where we should be today, and what would be the state of our balance


of payments, if we were still having to buy our imports at the prices which were ruling in world markets in 1951. It would be a disastrous situation. We should either be running a very heavy deficit in our balance of payments or we should have had to cut our standard of living substantially. Indeed, it is very likely that both things would have happened.
As for industrial peace, I do not think that anybody would dispute that we have recently been going through the worst period since the war. More working days were lost in disputes in 1954 than in any year since 1945, and it looks as though the figures will be worse still in 1955. At the moment, I am content to state these facts, but I shall later turn to the question of cause and effect.
I now come to the present situation. Once again, I would not wish to dispute for a second that we have full employment. We have brimful employment; we have a great deal of overtime, and we have more people at work. But there are certain consequences of that situation which we shall have to consider. As for the balance of payments situation, hon. Members know that it is much less satisfactory. I think the Chancellor will agree that we have been in actual balance of payments deficit for nine months, at any rate up to the end of March.
I do not know the exact figures for the first quarter of this year, and perhaps the Chancellor does not, but with an average trade gap of £77 million for the first quarter it is, to say the least, extremely unlikely that we were not in deficit on the account as a whole for these three months, as we were in the previous six months to the tune of £40 million.
In April, as we know, the trade gap was reduced to £66 million. I must confess that when the Chancellor referred to this fact during the General Election I thought that he was decidedly complacent about it. I should not feel very happy with a trade gap of £66 million. If he has any comment to make, if he can assure us that at that rate we shall at least be paying our way, we should have that assurance from him. We have had the May figures, but the President of the Board of Trade urged us to be extremely

cautious about them. Although we do not know to what extent, they are probably affected by the docks strike and cannot very well be brought into the picture just yet.
I do not want to be particularly gloomy about the future; indeed, I think that there are two things which may very well help us. First, the terms of trade may improve. They have improved in the last two months by about two points, though they are still less favourable than they were about a year ago. Secondly, if the increase in imports which took place in the second half of last year and in the early months of this year was the result of stocking up, rather than of a rise in consumption or of the increased demand of industry for a larger volume of raw materials, the situation is very much easier than might be supposed.
I can only conclude, however, from what the Chancellor himself has said upon other occasions, that he could not say that the rise in imports earlier on was simply an aberration—a temporary increase in stocks.

The Chancellor of the Exchequer (Mr. R. A. Butler): The Chancellor of the Exchequer (Mr. R. A. Butler) indicated dissent.

Mr. Gaitskell: I see that the Chancellor shakes his head. I think it was due partly to the natural requirements of rising production, partly to the greater freedom arising from the dropping of import controls, especially upon dollar commodities, and partly because of the rise in prices against us. If we cannot count upon anything but a fortuitous change round again in the terms of trade, what is the prospect in regard to the invisible account? In this case, I cannot take a very optimistic view. I would ask the Chancellor whether he can say how much more he anticipates we shall have to pay in interest charges to foreigners holding balances here as a result of the new monetary policy.
It must not be overlooked that we are in a very different position today from that in which we were when this so-called new monetary policy was practised, before the 1914–18 war. At that time the rest of the world was considerably in our debt, and a rise in interest rates did not do any harm to our balance of payments, but since the war we owe, on short-term account, some £4,000 million to foreigners. One per cent.


of £4,000 million is £40 million, but the rise in interest rates has been rather greater than that. We are entitled to some information from the Chancellor upon this matter. I would remind the House that since 1951 the burden of these interest and dividend payments to foreign countries has risen by no less than £80 million a year.
I conclude that while the May figures may be encouraging, in the light of the information available one can only say that there is no sign, at present, of a surplus in our overseas payments account for 1955. The second half of the year is always the more difficult half, because the debt interest has to be met upon the American and Canadian loans.
The picture in regard to our gold and dollar reserves is also not a very encouraging one. I was surprised when the Prime Minister seemed to be satisfied with the present level of the reserves. There has been an almost continuous fall in the gold and dollar reserves for a year now. At the end of March they were £125 million lower than they were in June, 1954. I do not wish to go over all the figures again. I realise that there have been certain repayments—but there have also been certain borrowings, as I pointed out in my Budget speech. There was a rise of £7 million in April, of which £6 million consisted of defence aid from the United States.
There has been no further change in May; indeed, if we exclude our balance with the European Payments Union, there was a deficit with the rest of the world—excluding also defence aid—of no fewer than 50 million dollars. This would not be so serious were it not for the fact that this is the time of year when reserves should be rising. Seasonally, this is the best time of year, when our dollar earnings should be high and our expenditure low. In the third quarter there is always a much less favourable position and, again, we have increased dollar payments because of the payment of interest and repayment of capital upon the loans.
If anybody still feels at all complacent about the situation I advise him to turn to the latest Treasury Bulletin for Industry and look at the little chart upon the back page, which shows how extraordinarily small has been the increase in our gold reserves in the last four years

compared with the increase in the reserves of other countries. We are almost the smallest of all on this chart, and in the light of the responsibility that we carry as the centre of the sterling area I do not think that anybody could feel very satisfied—although the Prime Minister appeared to be.

The Prime Minister (Sir Anthony Eden): The Prime Minister (Sir Anthony Eden) indicated dissent.

Mr. Gaitskell: With regard to prices, I have already said that we may be helped in the coming months by further falls in commodity prices—there has been some slight decline on balance—but can any of us say that it is likely that the cost of living at home will go down? Is there any sign of that?
I see from statements made in the Press that a large increase in the price of coal is likely to take place in the near future. I believe it was the chairman of one of the gas boards who spoke of a rise of 8s. a ton. [HON. MEMBERS: "A nationalised industry."] I am talking about the cost of living, and I would remind hon. Members that prices in different industries are much influenced by Government policy as a whole. To pick out what happens to be a nationalised industry is a reflection not upon that industry but upon the general state of inflation prevailing at the time.
I turn now to that subject. We have had a much bigger increase in wages this year than we have had in previous years. I ask the Chancellor whether he thinks that this increase outruns the improvement in productivity, and whether, in consequence, there are any reactions upon the cost of production in industry? Alternatively, does he think there is any prospect that these increases, which are very much greater than during the last three or four years, are likely to be at the expense of profits? I see no sign of that. It is far more likely that once again we are in the toils of a wage-price spiral. Government supporters will realise from the more sober commentators in the Press that that ought to be a matter of grave interest to the Government.
But there are two other things which strike the eye more than all these economic details to which I have been referring. They are the incredible Stock Exchange boom and the trouble we are


having in industry. I would not seek to prove a direct connection between those two phenomena, but those who think that they are not associated at all are simply burying their heads in the sand.
First, let me say a word or two about the Stock Exchange. Just how big the rise in share values has been is brought out very clearly in the Report of the Stock Exchange Council for the year ended 31st March. During this year the total value of all British Government securities held fell slightly. There were small increases in other loan capital, and small increases in the total value of preference shares, but they are of no great importance. This, however, is what the "Economist" has to say about equity stocks or ordinary shares:
Equity stocks tell a completely different story, as they must after the boom. The nominal value of ordinary stocks owned by companies has risen by £695 million—an increase that perhaps was due more to free scrip"—
or "bonus shares" as we usually call them—
than to cash issues—but their market value has risen by the amazing sum of £3,550 million.
This is in one year, the total value now being £12,792 million. The "Economist" adds:
Since these statistics were compiled, the market value of the leading equities has gone up by another 16 per cent.
What does this mean? It means, in effect, that holders of ordinary shares must have gained in 15 months the tremendous sum of about £5,000 million in the value of their property. [HON. MEMBERS: "Shame."] I am not saying that it is a shame, but it is a net addition to the economic power of people who, by and large, are fairly comfortably off to start with.
I discussed the earlier stages of this boom in the course of the Budget debate, when I referred to the various causes which I thought were responsible, such as dividend increases—which the Chancellor had done nothing whatever to discourage—expansion of bank credit to finance the purchase of shares, and the very generous tax concessions which the Chancellor had made to the companies.

I added, rather quietly, that I had no doubt that
the Stock Exchange boom will continue now. Whether that is a wise thing is another matter. I have no doubt myself that it is not a just thing."—[OFFICIAL REPORT, 20th April, 1955; Vol. 540, c. 202.]

Mr. Cyril Osborne: Has the right hon. Gentleman also the figure of how much of the equity capital is held by pension funds and insurance companies, on which the pensions of the ordinary working people depend?

Mr. Gaitskell: I will come to that point a little later.
In a fortnight since 26th May, the Stock Exchange index, and the "Financial Times" index of ordinary share values, rose from 196 to 211, that is 15 points, or 7½ per cent., in a fortnight, which is not bad going at all. This situation on the Stock Exchange is causing anxiety, curiously enough, in quite unsuspected quarters. Last Sunday I read a most interesting article in the "Sunday Express." It is written in a rather flamboyant style perhaps, a style different from that of the "Economist" or of the speeches of hon. Members here. Nevertheless, it is a thoughtful article and I propose to read one or two passages from it.
The article, which is by Mr. Frederick Ellis, says:
The Stock Exchange, a vital link in the nation's money machine, is becoming a casino. … The less you know about investment the more you will make. Just stick a pin in the back page of the 'Financial Times'—and buy. Bad news is almost a signal for a fresh market surge. The trade gap widens—up go share prices. Gold drains away in months we should be storing it up. It makes no difference.
Do not blame the Stock Exchange for this. … The blame lies with the Government for allowing inflation to roar ahead unchecked. The only way to protect your capital under inflation is to have your money in something that roars up with the speed of inflation. And the easiest way is through Ordinary Shares.
Then there is a very penetrating comment:
The dangerous view is being put about that with the Tories in power all will be well for four years. … In Mayfair you cannot go to a party without being asked by bejewelled women, 'Shall I buy So-and-So?' Everybody's doing it. Every day the boom is stoked up, as profits of the companies go up and up. So do the dividends. Not a day goes by without a big combine making more, paying out more.


He goes on, in a more sober vein:
Do you wonder that workmen with £10 a week and less stick their hands up to strike for more wages? I tell the Tories they will have these labour troubles with them until they restore real value to the home pound note.
I shall return to the social implications of this admirable article a little later. I would like to follow up some of Mr. Ellis's suggestions. What he wants the Chancellor to do is to shove up the Bank Rate another 1 or 2 per cent. I want to ask the Chancellor a question now about his monetary policy.
The right hon. Gentleman came to the House in February and told us that because of the balance of payments situation he would have to reimpose the restrictions on hire purchase and to raise the Bank Rate to 4½ per cent. Let us examine for a moment what has happened in consequence of these measures. In hire purchase the results are curious. On the one hand, there are certain very severe consequences, and, on the other hand, the influence seems to have been negligible. Hire-purchase deals in cars and other vehicles increased by 73 per cent. between January and May. In May, they were more than 50 per cent. greater than last year.
In furniture there is a very different story. According to information from the trade, whereas, in February, the volume of orders was 20 per cent. above last year, in March it was 30 per cent. below. Mr. Tompkins of the Furniture Workers' Union says that 57 per cent. of the labour force is affected by unemployment and that short-time has reduced production, while 12 per cent. of the workers are completely unemployed.
We must ask the Government their real intentions in reimposing these restrictions. I understood that the Chancellor wished to reduce consumption in order to increase exports or to cut back imports. In the first place, if that was his intention it is curious that in an industry which certainly does not have a big export trade and is not, I should have thought, a heavy burden on imports—furniture—there has been a very serious consequence, with a heavy loss so far as the country is concerned; and that in the case of the motor car industry, which does have a very large export trade and which certainly could export a good deal more, the effect seems to have been rather negligible.
That may have been not the only motive of the Chancellor. At times he has spoken in rather a prim fashion, if I may say so, about hire purchase—as though it were a very wicked thing to borrow in order to furnish one's house—but I must say to him that furniture is something that is normally bought by hire purchase, and I do not see that there is anything very wrong about that. I do not even think that there is anything very wrong about being able to get it on the terms that were allowed before these restrictions were imposed.
The main point that I wish to make is this. If this were part of a general policy of reducing consumption everywhere I could understand it, but I do feel that it is really unfair, both to the trade and to the particular customers—young married couples. and so on—who have difficulty in buying without credit, and without a lot of credit—that they should have been picked out as the particular group to carry that burden. I can only contrast this, as, no doubt, they do, with the astonishing capital gains on the Stock Exchange which have been registered in the meantime, and which can only have the effect of inflating consumption—and which have no doubt contributed to the increased purchase of motor cars.
I turn to the Bank Rate. I should like, first, to ask the Government whether or not they think that it is working. To start with, we were told that we should have to wait and see. During the Election, of course, it was all going along merrily—naturally. Everything always is during an Election so far as the Government are concerned. More recently, and particularly in his recent speech in the House, the Prime Minister seemed to be advising us to be a little cautious and to wait and see how things worked out. I think that the Chancellor might tell us his views on this. But it is even more important that he should tell us how the thing works. I really feel that by a party which depends entirely on this one instrument of control, and by a Government which are always advertising their faith in it, the House of Commons has been very badly treated.
We have never had any explanation from the right hon. Gentleman of how he thinks this particular instrument really does work. Of course, he uses his


different analogies; as the House knows, I am always interested in the Chancellor's analogies. At one point in the Election he spoke of the stiff medicine of last February making itself felt. We know that medical comparisons are one of his favourites, but he has recently also introduced a new mechanical comparison.
The right hon. Gentleman wrote an article in the "Daily Mirror"—during the Election he and I shared the columns of several newspapers—in which he said:
We have shown in these last few months that when signs of strain develop in the economy a simple monetary mechanism—the Bank Rate—can help to adjust the fault.
I must say that I was a little surprised at the right right hon. Gentleman taking credit for something which has operated for many, many years in British financial history—and to describe it as a "simple monetary mechanism" hardly fits in with the fact that he has never been able to explain it. I am not despondent. I am hoping that we shall have an explanation this afternoon, and in order to stimulate him may I offer him my own observations?
The real purpose of this mystique about the Bank Rate is to confuse everyone, but, in fact, all that really happens is that one tightens up the control of credit. I think the right hon. Gentleman will agree that one thing that happens is that more is borrowed from abroad and less is lent abroad. Incidentally, at the same time, one pays much more for what is borrowed anyhow, and that is one of the serious complications. I do not know how much money has come into this country as a result of the rise in the Bank Rate, and I do not propose, in this House, to enter into a lengthy technical argument as to exactly how the forward foreign exchange market affects the whole situation. I certainly always understood that the idea—or one idea—of raising the Bank Rate was immediately to sustain the reserves, because less money went out and more came in.
However, as far as the effects at home are concerned I do not think that there is very much doubt—and I think that the right hon. Gentleman will agree—that the idea is that loans from the banks should be reduced; that industries should borrow less, that persons should borrow less; that they should have less to spend

and that, in consequence, inflationary pressure should be reduced.
The curious thing about this latest increase in the Bank Rate is that it does not seem to have had any such effects. Advances for the past year are up. Loans and advances from the commercial banks are now higher by about £300 million than they were a year ago. It may be asked, "But was not that all before February?" By no means. From February to the middle of April advances increased by £68 million, and to the middle of May by a further £36 million. In other words, since the Bank Rate was put up—since the credit squeeze has been on—the banks have lent more to industry and to their customers generally to the tune of about £100 million.

Mr. A. C. M. Spearman: May I ask whether the banks' investments during the past four months have fallen by about £400 million?

Mr. Gaitskell: I was going to say that, but there is this difference between banks' advances and investments. The effect of the sale of investments is to depress the price of gilt-edged stock and to put up the price of long-term loans. The effect of increasing advances is directly to increase inflationary pressure, and if the Chancellor wants to avoid that I cannot see how he can avoid—as the City is expecting—a much tougher policy on bank advances.
The Chancellor should tell us whether he is satisfied with the extent of the credit restriction that has so far taken place. Certainly, no one could suggest that the Stock Exchange, apart from gilt-edged, seems to have been unduly affected by credit restriction. Nor can one see any sign that it has brought down the general level of consumption. As far as one can see that has continued to rise at a very rapid rate.
The Chancellor should announce what he intends to do. Does he intend to tighten up credit further? Does he intend to instruct—or force—the banks to cut down their loans and advances? If he does not intend to do this, will he tell us what he proposes to do about the boom on the Stock Exchange? If he does intend to do this, will he also tell us just how he is going to have this


tighter credit restriction for the sake of the balance of payments without also affecting the level of production, the level of orders, and possibly the level of employment in industry?
I turn, as in fairness I think I must, to answer some of the questions which the President of the Board of Trade put to us in his speech. He asked "What policy do you offer? What is your alternative to laissez faire—to Conservative freedom?" He quoted from that famous article by Professor Arthur Lewis. He referred to a phrase of Professor Lewis's about controls being unpopular
… because they put the whole population at the mercy of Government clerks …
Professor Lewis does use that phrase, but I think that the President of the Board of Trade, if he read the article—which he may not have done, of course—might perhaps have cast his eye to the bottom of the page to see what Professor Lewis's conclusion was on control. I will read it because it is quite a useful statement of the Labour Party's views. He said:
Not all controls should be, or have been, swept away. The economic system functions badly unless certain minimum controls are maintained. We are particularly interested in those controls which are necessary to maintain full employment, to prevent the emergence of depressed areas, and to safeguard the balance of payments. These we must distinguish, keep, and refine.
I think that that is an excellent statement of our attitude on this question of controls. We have never said that we believe in controls for their own sake, nor have we said that a Government should dispense with control of credit. Certainly, we must control credit, otherwise we shall be in serious difficulties. But what we so say is that to rely solely on credit control is to make it extraordinarily difficult to hold back inflation while getting full employment. If we resolutely refuse to use any other instrument at our command but this very blunt and broad instrument of the Bank Rate, then I think we are likely to run this danger, that in order to ease the balance of payments situation we shall be forced to depress the whole level of economic activity.

Captain Christopher Soames: Would the right hon. Gentleman be prepared to give a list of the controls which he suggests it is necessary to keep for ever?

Mr. Gaitskell: I thought I had given a fair summary, but I would say certainly that we should have kept a greater control over inessential imports than we have. I think we shall need some controls—I was going to refer to this, anyhow—if the policy of building houses to clear the slums is to be carried out.
I want to draw the attention of the House, in that connection, to what is happening, which I think is rather worrying. We now have under construction 40,000 fewer permanent houses being built by local authorities than we had a year ago, and most of that fall is a fairly recent one. There has been a big figure; nobody denies that. We had a figure of 187,000 at the end of March, 1954, but it was only 147,000 at the end of March, 1955.

Brigadier Clarke: What about 1951?

Mr. Gaitskell: It is easy to say that. I could spend a lot of time explaining just why I think building has increased. It is mainly because there are 70,000 or 80,000 fewer workers on repair work. In my own constituency, as I mentioned in a speech last December, the City Council in Leeds is being prevented by the central Government at the moment from building as many houses as it wants to build. The number has been cut down from 3,000 to 2,000 houses. It is losing labour from its building sites now.
The answer given by the Government—this was given after my speech in December—is that it will not be possible to build them. It will not be possible to build them because of the immensely high competing claims of private building. This is a matter to which the Government really must pay attention, because in constituencies like mine housing continues to be about the most serious problem affecting ordinary people.
May I now turn to some remarks which the Prime Minister made relating to Professor Lewis's article? I know that Professor Lewis himself has written a letter to "The Times," and the "Manchester Guardian" has taken up the cudgels on his behalf, but I do not apologise for saying a word about the subject myself. I would remind the Prime Minister of what he did, and I would remind him, too, that he is Prime


Minister. He selected this passage from Professor Lewis's article:
So our ideas about the nationalisation tool are in ferment. It doesn't solve the problem of labour relations; it reduces private wealth in importance, but only gradually; it raises unsolved problems of control; and it raises the issue of how much power we want our governments to have.
He did not say what Professor Lewis wrote a little later. I think that when one quotes a passage from a writer and says that it means something, it is advisable to read on.
Of course, I realise that the Prime Minister may not have read the article. He did say, in a very nonchalant fashion:
I was interested to read the other day … an article by a Professor Arthur Lewis. …"—[OFFICIAL REPORT, 9th June, 1955; Vol. 542, c. 58.]
No doubt, he found the article lying among some papers at Chequers. We are delighted to know that "Socialist Commentary" lies on the table there for the benefit not only of himself but of any visitors he may have. I do not wish in any way to discourage him. I think it is an excellent thing that he should start learning about home affairs by reading "Socialist Commentary." All I am complaining of is that he is not a very conscientious student.
The right hon. Gentleman went on to read another passage from the article:
It is traditional in our party to burst a blood vessel whenever the word 'profits' is mentioned.
The paragraph went on to say:
To demand that wages should be restrained so that profits should be high is, clearly, sacrilegious language. But since this is clearly the situation in which we find ourselves, we have to face it.
I am going to read to the House what the Prime Minister did not read, and which immediately follows the part which he quoted. Professor Lewis says this:
High profits are tolerable to us, as Socialists, only on two conditions: if the profits are earned by public enterprises, or if property ownership"—

Hon. Members: Hear, hear.

Mr. Gaitskell: I would remind hon. Members opposite that their own Leader and Prime Minister claims Professor Lewis as a convert to his side. Let me continue:

… or if property ownership is widely diffused throughout the community. The first is one reason why we stick to nationalisation in spite of all its problems, and must extend it to all forms of industry which can operate efficiently on a very large scale. The second is a new line of country for us: to spread property ownership widely, instead of merely destroying private property. But if we are for a mixed economy—and so we must be because we are not totalitarians—this means we favour nationalising the big and widely distributing the small.
I would ask the Prime Minister to listen to this paragraph, which I do not think he can possibly have read:
It is possible to devise taxation, inheritance and financial systems with break up property concentrations, and redistribute property ownership.
If the Prime Minister is telling us that he is in favour of the redistribution of property, I must ask him what exactly he is going to do to achieve it, because certainly nothing that the previous Government did led in any way in that direction. [HON. MEMBERS: "Oh."] I should have thought that hon. Members, after hearing the figures of increased capital appreciation for equity shares on the Stock Exchange, would keep a little quiet about the differences in this field.
It may be that the Prime Minister is pinning his hopes on co-partnership and profit sharing. We are not against this, if employees want it. I even suggested to the T.U.C. in 1951 that they might like to consider it. We need large company saving, and I would like to see the workers rather than the shareholders getting some of the bonus issues. But I want to warn the Prime Minister, first, that this is no new thing. As the "Financial Times" rightly said:
The industrial history of the 20th century is strewn with schemes that have failed.
There are some schemes that are good and some that are not so good, and I hope that if there is to be encouragement great care will be taken in what is encouraged, and that, in particular, attention will be paid to the question of the control of the workers as shareholders over the business. I would say, secondly, that it is certainly no answer to the problem of industrial relations, and it is certainly no answer to the problem of the distribution of wealth. Apart from anything else, many workers will inevitably be excluded.
In conclusion, I should like to suggest one or two plans which the Prime


Minister ought to consider if he is serious about redistributing wealth. First, may I ask him to check the tendencies the other way? Will he please advise the Chancellor of the Exchequer that he must do something about controlling the boom on the Stock Exchange which, say what hon. Members like about it, unquestionably increases substantially the wealth and economic power of the wealthier part of the community?
There is no doubt at all that although some insurance companies hold a small proportion of their assets in equity shares—certainly no more than 30 per cent—overwhelmingly the position is this: that gilt edged, which have been depressed, are held by institutions and by small people but ordinary shares are held far more by larger and wealthier people. It is very easy to see why this must be so. The cost of buying and selling shares on small deals is very heavy, and there are great handicaps of knowledge and tradition, and an absence of facilities, all of which add up to the fact, as everybody in the business knows, that this is a form of ownership which principally affects wealthier people.
Secondly, if nothing else can be suggested, it might be a good plan, instead of giving tax reliefs to companies—which have led to this suggestion—to give them to other people who need them rather more.
I would say, thirdly, to the Chancellor of the Exchequer, that perhaps he might speak just a little more loudly about the need for dividend restraint. I think he might consider a capital gains tax. The Report of the Royal Commission on the Taxation of Profits and Incomes discusses this, and I would say, in passing, that we hope to have a separate day to debate it. We realise that the Chancellor will not wish to commit himself, but we want a free discussion of it.
I want to make this point about a capital gains tax—and it is made by the minority in the Report and I think it is the most important point which they make: if we assume full employment—and we do assume it—there is certainly a tendency for high profits and capital appreciation, quite apart from inflation, which seems fairly endemic in Tory "freedom." The general risks on capital are undoubtedly greatly reduced by a

state of full employment and the case for a capital gains tax, alike on equity and on yield, is, therefore, very much greater than appears from the majority Report.
Another idea, which I hope the Prime Minister will take very seriously, is this: why not let the community share in some of the capital gains, especially if they are not to be taxed? I referred earlier to the astonishingly successful investment in the Anglo-Persian Oil Company, where British Governments in general paid £5½ million for shares which are now worth £230 million. I referred earlier to the shares taken over during the war by the Coalition Government in United States securities, which, I think, were worth half-a-billion dollars and which must now be worth at, least 2 billion dollars. If I may venture to refer to my own article in "Socialist Commentary," why not take over shares in lieu of cash when death duties are paid and let the Government share a little of the capital appreciation?
The truth of the matter is that the Government are doing the opposite to all this. I would draw the attention of the House to what is happening to steel shares today. I will read five or six quotations. The issue price of shares in United Steel, when they were sold back to private shareholders, was 25s., whereas the current price—this is at the end of last week—is 44s. 7½d. The issue price of Lancashire Steel was 22s. 6d. and the current price is 36s. 6d. The issue price of Stewart and Lloyds was 35s. and the current price is 73s. 9d. The issue price of John Summers was 24s. 6d., and that has risen to 43s. 9d. For Dorman Long the figures are 22s. 6d., and 35s. 6d. and for Colvilles 26s. and 37s. 4½d. Why should the community not have had those capital gains? What socially valuable task have the people who owned those shares fulfilled in owning them? What conceivable difference have they made to the output of steel in this country?
But it is worse than this, because the rise in share values is not just a part of, in this case, the normal Stock Exchange boom, if I may so call it, which we expect under this Government. The "Economist" has this to say about it:
But why have steel equities leapt ahead in the middle of a strike that threatened production in that industry more than in most? The answer can be found in this week's


announcements from Colvilles and John Summers. Both those announcements indicated that trading results in the current year will be much better than the cautious forecasts made in the offers for sale.
It is perfectly clear that the Government have sold these national assets too cheaply and deprived the community not only of a capital gain which is now to go to private individuals but of the fair value to which it was entitled at the sale. I hope that the Prime Minister will not be too upset by all this or call it an attempt to create class hatred. It is a curious—or perhaps I should say a natural—Tory reaction, a sort of defence mechanism, that when anybody complains about social and economic injustice it is described as fomenting class hatred.
The Prime Minister and his colleagues can take comfort from the results of the Election, of course, but I would not advise them to be too complacent about such a very small change in the total number of seats and such a very small turnover of votes. If they look away from the Election, and back to the country for a moment, I think they will find that no one can deny that there is today a pretty inflationary situation in Britain. I have not the slightest doubt that if we were in power it would be described by hon. Members opposite as over-full employment. We have a balance of overseas payments which, to say the least, is precarious. This year there may be a deficit and there is certainly little prospect of a surplus.
This is despite the still favourable external conditions and still favourable terms on which as a nation we buy and sell. Prices at home are continuing to rise and are rising more rapidly than in the countries which are our main competitors. We are in the middle of the worst crop of strikes we have had since before the war and we have the biggest stock market boom in our history.
That these things are all happening together, I venture to say, is no accident. They are directly and indirectly associated. They are the result of the late Government's policies of trying to preserve full employment but removing the defences against inflation, of adopting fiscal and other measures which have led to a more uneven instead of a fairer distribution of wealth. It is all too clear

that the present Government will continue these same policies and probably carry them even further.
Because we believe these policies to be dangerous to the country, presenting us, when conditions are unfavourable, only with the alternative of inflation on the one hand, with all its evils, or depressed production and unemployment on the other hand; and because we see no hope in these policies of any further advance towards the ideal of a socially just community, we shall do all we can to oppose them in the House and to expose their consequences to our fellow citizens outside.

4.40 p.m.

The Chancellor of the Exchequer (Mr. R. A. Butler): I think I shall cover most of the points raised by the right hon. Gentleman the Member for Leeds, South (Mr. Gaitskell) in the course of my remarks. For example, I have references, in what I have in mind to say, to his description of the Bank Rate, to his questions about the general state of profits, to his questions about the balance of payments, to the position of exports, and to his allegation that we have no policy of economic action for the nation.
I will attempt to deal with these as faithfully as I can. I will take up first one statement which the right hon. Gentleman made in the latter part of his speech, namely, that we should not attach too much importance to the results of the General Election. The first point to which I would draw his attention is that the Conservative Party now has a majority of votes over his party, and our policy has been endorsed by the electorate in the most remarkable manner, as a result of our work over the last three and a half years.

Mr. Frederick Peart: Not in agriculture.

Mr. Butler: I speak for an agricultural constituency where I have very considerably increased my majority. However, I do not want to utilise this occasion for the sort of debate that we had prior to the Election, because, frankly, there is not quite so much necessity for the purely political argument at this stage as there was before, and the fact that our political arguments were so much more effective than those of the right hon. Gentleman has brought us a


very heavy responsibility to which, in the more sober portion of his address, the right hon. Gentleman drew attention.
I should like to take this opportunity of dealing with some of the more difficult questions to which he referred. I should, however, like first to deal with this famous article by Professor Lewis, because that was raised by the right hon. Gentleman. The Prime Minister would be the first to acknowledge the graceful arid, indeed, humorous manner in which Professor Lewis has resisted the Prime Minister's embraces, as he said. The Prime Minster would be the first to acknowledge that this article, like truth, is many-sided.
I have seldom read one article which says so many things in so many different ways and which can be read in so many alternative ways. In answer to the right hon. Gentleman's main claim about the alleged ebullience of profits, I should like to quote from this article the following phrase. Professor Lewis acknowledges that a mixed economy is inevitable in the phrase to which the right hon. Gentleman himself referred. Professor Lewis said in the previous paragraph:
If we want large investment and a rapidly rising standard of living, we must have a high profit ratio. If the party"—
that is the Socialist Party—
is to tolerate private enterprise, while desiring a rapid growth of the standard of living, it must also rejoice when the profits are high.

Mr. Gaitskell: Professor Lewis goes on then to say the conditions under which we can tolerate it, which I read out.

Mr. Butler: What is wrong with the intellectual processes of this particularly able and honourable Professor is that he acknowledges that we have not yet reached the Nirvana, or promised land, and that in the period in which we have a mixed economy it is inevitable to have profits.
I think that one weakness of the right hon. Gentleman's speech is that he is trying, by his language today, to make it less likely that we shall have that type of prosperity upon which alone full employment can rest, and that he is trying by aiming at reducing the few to make the position of the many worse.
In answer to the Amendment in general, it is our intention to create new

wealth, new opportunities and a greater prosperity. It is only in this way, by getting a larger cake, that we can distribute larger portions to all sections of the community, as, indeed, I shall show in the course of my speech.
The first point to which the Amendment is designed to draw the attention of the House is that there should not be confidence in the policies of Her Majesty's Government. I was not surprised that the right hon. Gentleman spent so little time on the last three and a half years. In fact, whether the right hon. Gentleman looks at the position at home or abroad, he will find at home that confidence has recently been registered in our policy, and if he had come with me recently to Europe he would have heard the nations of Europe, led by representatives from France and Italy, backed by others, ask Britain again to take the chair at the Council of the O.E.E.C., which, I think, indicates a great deal of confidence not only in British policy but also in British leadership.
Confidence in our policy has been, and will be, essentially based upon the way in which we can build the prosperity of the future. When we look round and see what we have achieved, when we consider that we have carried and absorbed into the economy an immense defence burden, which the right hon. Gentleman himself, with the Leader of the Opposition, took on, when we consider that we have increased the social service programme in almost every particular, when we realise that we have felt and carried the strain on our overseas balance of payments despite the increase in imports for our factories and food for our people, and when we consider that we have given incentives to industry and agriculture and to millions of our fellow people, and when we consider that we have increased production and raised our exports, I cannot believe that the House and the country will believe half of what the right hon. Gentleman said.
It would be foolish to imagine that our economic policy is without its difficulties, or that the prospect is entirely set fair. I think it is important for the House to register—and that may be one use of this debate—that there will continue to be internal and external difficulties—and I shall be speaking of them and facing them quite frankly later on. The real


point is whether, like this Government, we recognise, face and deal with these difficulties in time, or whether, like the Administration in which the right hon. Gentleman was Chancellor of the Exchequer, we allow our reserves to run out and our lifeblood to drain away.
The right hon. Gentleman asked me about the policies of 24th February, and I will take the opportunity to deal with these. But let me first deal with the first challenge in the Amendment, namely, that relating to full employment. It really is quite a change—the language of the right hon. Gentleman—compared with the criticism made of Conservative policies in the past in regard to full employment. There is practically no word of criticism. It seems now to be taken for granted that under our Government we have been able to ensure full employment, and that we shall be able to continue to do so.
What is the bogey now brought forward? The right hon. Gentleman quoted the "Sunday Express." May I quote the "Daily Express" of yesterday? The bogey, according to the hon. Lady the Member for Liverpool, Exchange (Mrs. Braddock), is no longer, according to this article, the great fear of the brutal Tories and the unemployment which follows from their policies. This is what she says:
Right now the basic insecurity the workers feel is this: they are haunted by the spectre of the van driving up to the door to take away the T.V. set.
The terrible bogies of the Conservative Party are reduced to this haunting anxiety. That is a remarkable tribute to the policy of Her Majesty's Government during the last three and a half years. If people are to be haunted by this fear, my advice would be not to buy T.V. sets or other appliances unless they can afford them and pay for them in the proper way.
The figures in connection with full employment which I can quote are, I think, rather remarkable. If we disregard the dislocation caused by the fuel crisis in 1947, unemployment reached its post-war peak in April, 1952, when the figure for the United Kingdom as a whole was 468,000. On 3rd March and 10th November of that year, we were warned from the Opposition benches that

unemployment would reach 1 million by the end of 1952. In fact, what has happened? Since then unemployment has fallen steadily, and now it is as low as it has ever been in peacetime. For example, the unemployment percentage in May was down to 1 per cent., and for every person unemployed there were 1½ vacancies. No other major industrial country in the world can show unemployment percentages as low as ours. The German figure for last year was 7 per cent., the United States figure was 5 per cent. and if the House turns its attention to our figure, which records the lowest unemployment in peacetime, I think they will realise there is not very much point in this aspect of the Amendment criticising Government policy.
The truth is that we have been carrying out a policy of full employment with all its attendant risks for the economy and with all the danger of rising prices and everything else, whilst still carrying out a strict monetary policy. I noticed that in his speech the right hon. Gentleman rather turned his argument. Instead of associating a strict monetary policy with a rise in unemployment, he seems to think that it was possible to carry out the two together. That is an example of the manner in which we have conducted our social and economic policy over the past three and a half years, and as far as I am able to see—one must always be cautious in any prognostications; but it will be the intention of the Government so to conduct our policy—we shall maintain the fullest possible level of employment.
The biggest threat to employment in the United Kingdom would come from any serious deterioration of the balance of payments or from lower productivity, which would be due perhaps to industrial unrest or to similar reasons, and it is, therefore, to those important points that I now want to direct the attention of the House.
I believe that the measures such as stricter credit and the hire purchase policy the Government are following are essential to protect our balance of payments and, therefore, to maintain employment. I can only give the House this assurance, that Her Majesty's Government will continue most closely to watch their effect and to see that they are effective.
The right hon. Gentleman asked me to give an extension lecture upon the Bank


Rate. Heaven forbid that I should do anything of the sort, but I will describe to the House some of the points in trying to answer the questions raised by the right hon. Gentleman. It clearly takes some time for the effect of the Bank Rate and the tightening of credit to make themselves felt. Therefore, my right hon. Friend the Prime Minister was absolutely right in making his observation.
But the published figures already bear witness to the effective pressure which is being exercised. In the three months since the Bank Rate was increased to 4½ per cent. bankers' deposits—that is to say, money available for transactions carried out by cheque by persons or firms—have been reduced by £143 million. That is a very considerable figure when the House realises that in the same period last year they rose by £97 million.
Bankers' advances have not fallen, as the right hon. Gentleman deliberately drew to the attention of the House. They rose by—I will give the latest figure—£104 million compared with a rise of £53 million in the same three months last year. It is important that the House should have all the facts. What is the reason for this rise? The rise has been in a large part due to advances to the basic industries, particularly of gas and electricity. These and other advances have been necessary partly because the market for long-term capital has been inactive owing to the effects, first, of the Election, which is never a good time for these sort of things, and then of the strikes.
In fact, the rise in total advances would have been considerably greater had there been no check on expansion. We shall watch these figures, bearing in mind another point made by hon. and right hon. Gentlemen opposite, that we desire to maintain investments. The answer to the right hon. Gentleman is this, that, although I do not regard the figure of bank advances as yet satisfactory—I say deliberately "as yet"—we have at least maintained a very considerable degree of investment. That is also the answer to the point frequently made from the benches opposite that the tighter monetary policy may not enable us to keep up investment. I believe we are managing not only to maintain full employment but also to keep up a high degree of investment.
It is said on the one hand that the restrictions are not tight enough, and on the other that they are hampering desirable investment, and I should like to give the House the latest figures on investment to indicate that in this respect we are maintaining the prosperity of the economy. The area of new factory space approved for manufacturing industry in the first quarter of 1955 was the greatest for any quarter since the war, and about two-thirds higher than a year earlier. Completions in the final quarter of 1954 were slightly down on 1953, but the area of new factories started was nearly two-thirds higher. For the year as a whole completions were up by 17 per cent. and starts by 45 per cent., which is nearly half, and indicates, in answer to the point previously made by the right hon. Gentleman, that we can report considerable progress.
At the same time net new home orders for machine tools in 1954—and this is a vital part of our industry which I am sorry to see is threatened with nationalisation in the programme of hon. and right hon. Gentlemen opposite—were two-thirds up on a year earlier, and in the fourth quarter they were over twice as high. In January this year they were over two-thirds higher than the rate in the first quarter of 1954. These are all satisfactory signs of investment, and the House may now like to know what is the effect of some of the restrictive measures which have been imposed.

Mr. Peart: Will the Chancellor also give us the position of agriculture, in which investment has been falling over the last three years? If he has the figure there, will he say what is the position and what is the latest figure?

Mr. Butler: I have not got that with me, but I am quite satisfied that, as a result of the latest price review, the general development of agriculture and, I hope, better weather, production and investment will pick up. We cannot deny that it was largely due to the bad weather that there was a slump in agriculture last year.
The House would like to know what has been the effect of some of the restrictive actions in connection with hire purchase to which the right hon. Gentleman the Member for Leeds, South referred. The increased prosperity of last year gave


a very rapid impetus to this kind of transaction. I cannot give the House the latest figures, because I am not satisfied of their accuracy. It is, therefore, particularly difficult to form any opinion of rising trends. But it is fair to say, as the right hon. Gentleman did, that the sales of new and secondhand motor cars are still rapidly rising. In the case of furniture, the trade has been quite severely affected, but in between these extremes of furniture and cars there is considerable evidence that the upward movement in those transactions is being checked.
I do not think we shall see the full effect of these restrictions until the various other credit measures which I have asked the banks and financial institutions to undertake have also made themselves felt. I cannot go further today than to say that the motor trade exports are much more affected by the dock strike than by anything which has happened in this quarter. I am watching the case of other industries, but I cannot deny that, as this policy was intended to be severe, its severity is likely to be felt in the country in certain industries.
Now I come to the balance of payments. The right hon. Gentleman asked me several questions about that. On the external side, the measures introduced in February produced an immediate improvement in the strength of sterling. The loss of reserves, which was not great, and which I described at the time of the Budget, has been checked. It is some tribute to the strength of sterling that the loss was not resumed in May, despite the uncertainties which are always attendant on an Election and despite the strike threats which overcast the last days of the month, and, therefore, we can take satisfaction in the strength of the position.
The right hon. Gentleman also referred to the trade figures for April. Those for May which have since been published show a further improvement. In May the excess of imports over total exports is, in fact, less than it was in May, 1954. The trend therefore is satisfactory. Taking April and May together, imports by value are only 8 per cent. higher than a year ago, whereas in the first quarter they were 22 per cent. higher. We have therefore altered the trend; imports have come down and exports have stayed up—

Mr. Gaitskell: Does the right hon. Gentleman consider that the May figures in no way reflect the dock strike?

Mr. Butler: I do not think the May figures are very much affected by the dock strike. We shall have to wait and see for further months whether the trend is satisfactorily continued. It is very difficult to give a satisfactory answer. I should like to say in general that I am not yet satisfied, nor are the Government, and it is most important not to have an air of satisfaction,—[Interruption]—perhaps hon. Members will allow me to finish the sentence—particularly in view of the dock strike and other industrial disputes to which the right hon. Member particularly drew attention.
The trade gap in these two months, April and May, was about the same as a year ago, but it would be wrong to base a judgment on the trends for two months. My feeling about the balance of payments, which I think it important for the country to realise, is that we have some very considerable problems before us in the months and year that lie ahead. We have very serious overseas expenditure to face due to the liabilities which we must undertake in defence of general world security and which our Forces have so gallantly undertaken in the last years.
On the side of agriculture, to which the hon. Member for Workington (Mr. Peart) drew attention in this debate, we have still a very heavy bill for foreign feeding stuffs, and it is essential that we should grow more grass at home and more of our own feeding stuffs to ease the balance of payments. It is most important, and a large figure is involved.
In the case of oil, while any rational person would of course have expected that we would get an immediate easement on the balance of payments, in fact, owing to certain transactions, the settling of some of these disputes has resulted in an extra burden on the balance of payments, which will right itself—but it is there. The position of the invisibles is not satisfactory. I have not the figure of interest charges to which the right hon. Member referred, but if he will put down a Question I will endeavour to give the answer.

Mr. Harold Davies: Is the right hon. Gentleman able to work out an estimate of the effect of increased importation of American coal on our situation in the


12 months ahead? What hope is there of lessening that importation and improving the situation?

Mr. Butler: I was just going to mention the coal situation. The difficulty about it is that we have had to take it both ways—to reduce our exports and to increase our imports, some on dollar purchase. We have made an attempt to buy certain coal for sterling, on which I was very keen, but there is a limit to the amount we can so buy. I must also warn the House that the coal position is bound to affect our balance of payments as to tens of millions of pounds owing to the loss of exports and the increase of imports due to stoppages and, as I think, of the present insufficient rise in production.
If I were to sum up the position on the balance of payments and attempt to give the House the exact position as I see it, I should say that the situation has been moving not unexpectedly and more or less as I forecast in the Budget statement. Production is rising satisfactorily, consumption is moving roughly as we expected, as a leading article in the "Financial Times" indicated yesterday, although wage increases are bound to lead to further increases in consumption of which we will have to take account in assessing the general inflationary position.
Credit policy has been taking effect, and the external position, in so far as we can judge it to date, has been beginning to show some response to the measures we had taken. Nevertheless, the House should be absolutely aware that there remains before the country the imperative need to keep our costs down and to increase our exports.
Before I deal with that in more detail, I want to refer briefly to my visit to Paris last week, because I think the House of Commons should receive a report as other Parliaments of the nations represented there will be receiving reports. I do not propose to go into this in detail. The right hon. Member is evidently accustomed to dining out with bejewelled women. Any such persons of my acquaintance are not at all interested in O.E.E.C. It is not a good subject for dinner parties, nor is it easy to explain to the House. It is so technical as to make people shun one in the corridor. In Paris, however, we were discussing

very simply European housekeeping, our purchases, sales and accounts.
The House should remember that the subject to which this meeting was devoted is not so tedious; it was due partly to the surge in European production that we got through so successfully in our economy last year before we could see whether the American economy was likely to recover from the threat of slump. Therefore, the activities of Her Majesty's Government over the past year in Europe have not been without good reason and not at all unsuccessful. We have managed as a result of the last Paris meeting to maintain the solidarity of the European community whilst preparing for an advance towards a wider and freer system of trade and payments. We are approaching 90 per cent. liberalisation of trade.
I should remind hon. Members opposite that if they had introduced import restrictions, if they had the opportunity—which fortunately they have not—they would have put back our economy by encouraging retaliation against our exports at the present time. In my view it is essential to proceed steadily to a widening of trade to give opportunity for this liberalisation. We have ensured through the Paris meeting a prospect of a wider system of trade. We have agreed that the European Payments Union shall continue in principle for a year from 1st July with harder gold-credit ratios, changing from 50/50 to 75/25, from 1st August, and with suitable arrangements for its termination in case of need. Also, in case there is a transition at some date at present unspecified to a wider system with convertibility of currencies, we made preparations for three things: first—and this was greatly to the relief of the European nations—assistance for countries in short term balance of payments difficulties from the European Fund, secondly, a system of clearing of payments which is being worked out in detail at present and, thirdly, assurances about continued trade liberalisation in the period after any convertibility might be introduced.
These pieces of work were not insignificant. They were intensely complicated, and I know that in their intricacy they would have rejoiced the noble mind of the predecessor of the right hon. Member, the late Sir Stafford Cripps. They have done us good in our European


position as a whole, and they were certainly welcomed by the representatives of the United States of America. When we put this development in the freer trade of Europe and the arrangements for future payments against the trends reported to me from the United States of America—the further opportunities for opening up trade—when we examine the continued expenditure of U.S. dollars overseas and when we look around at the solidarity of the Commonwealth countries and their improving economic position, the House will see that we are indeed proceeding along the right road, although we have a long and hard path before us.
The right hon. Member referred to the need for earning a bigger surplus. I quite agree. Last year the United Kingdom had a surplus of about £160 million, including aid. The year before it was £217 million. I have to warn the House that we shall have to struggle hard if we are to earn a surplus on that sort of scale in the coming year. It is because we have to struggle hard that I now want to make one or two observations upon the effect of the strikes.
In fighting for this surplus, we have to look at the effect of the strikes. We are all thankful that good sense has prevailed and that the railway strike is over. The House will no doubt wish me to pay tribute to the manner in which what were once called the travelling public—but what I suppose I had better refer to as the non-travelling public—behaved during this unfortunate dispute. Not unexpectedly, the whole public rose to the occasion and behaved, as they always do in any emergency, with calm and patience. A great spirit of neighbourliness was shown in the country, and it was noteworthy how both individuals and business undertakings showed themselves ready to help each other.
We should also pay tribute to the Commissions concerned, to the energy of labour and management, as well as to the plans which the Government worked out ahead, and to the magnificent degree of improvisation which helped to bring us through these difficulties.
I think also that it would be wrong if foreign observers thought that the effects had been greater than they have been. For example, we should recognise that coal production was maintained, and that

the supply of coal to industry has been better than we thought likely, but the double handling resulted in greatly increased costs, which will all come home to roost when we make our calculations in the weeks and months to come.
There has been very little unemployment, and though production suffered, the extent of this cannot be very great. We have also been able to keep up a substantial level of exports. Indeed, when we look around to see how many enterprises closed, the only one I have had reported to me was a distillery in the north of Scotland which, strangely enough, closed down through lack of water. We must, therefore get this matter in the right perspective. Perhaps hon. Members were expecting me to be unduly gloomy, and I think it necessary to remind them of these facts.
We must not be deceived by favourable signs into thinking that either the dock or transport strikes or any other strikes only concern the workers and employers directly involved. There is no doubt that, with about 40 per cent. of dock labour still out, the strain remains severe, and we are feeling this very much in our export trade. The effects will be difficult and will be felt for some time. Furthermore, looking at this from the point of view of the economy, industry has been living on its accumulated stocks of materials and components on the one hand, and piling up stocks of finished goods on the other. Further, in so far as production has fallen, the effect must be inflationary, since incomes in general will not have fallen to the same extent. This will tend—and I warn the House that we shall have to take account of this in the months to come—to add to pressure on prices, and to the pull of the home market against exports and towards imports.
Therefore, our balance of payments must be affected, and at a time when demand has already needed restriction. I said just now that we had succeeded by all manner of improvisation in getting through our troubles, but many troubles still remain. I will not go into them and take up the challenge of the right hon. Gentleman, who said that there was no actual connection between Government policy and these strikes, but I would remind him that these strikes have been concerned especially with matters at issue


between unions. [HON. MEMBERS: "No."] Well, I prefer to leave to the debate on Thursday the full deployment of this case, but I do not think that much of what the right hon. Gentleman said was absolutely fair in present circumstances.

Mr. Gaitskell: I should like to correct what the Chancellor has said. I said that I was not going to argue a direct connection between the Stock Exchange boom and the strikes, but I said that it would be very foolish not to recognise that they were associated. We take the view that Government policy creates a background and atmosphere in which industrial relations can sometimes become very bad.

Mr. Butler: I think that, when we come to consider the actual circumstances of the dock strike, for example, the right hon. Gentleman might have explained a little more clearly the origin of and the reasons for some of these industrial disputes and not have attempted to attribute them to a boom which has nothing to do with the Government. However, we can leave the rest of the debate on the strike until Thursday.
When we face the balance of payments position of the country, we must realise that our exports are not increasing to the same extent as those of other countries. For example, the percentage increase in German exports is nearly twice as much as ours. We should be running into trouble with our eyes open if we continue to allow the level of our internal costs to rise because we are more interested in increasing our money incomes than in striving for the increased productivity and efficiency which alone can enable us safely to enjoy these rises. The answer to the right hon. Gentleman opposite is that we can only afford these rises in wages if we increase our productivity.
There is no doubt that we will have to increase productivity if we are to keep up the undoubted improvement in the position of the wage-earner, and here I will give the House the figures relating to the undoubted improvement in the condition of the wage-earner. There is no excuse, as the Amendment implies, for saying that the wage-earner is relatively worse off because of the increase in the cost of living in recent times.
I pointed out in my Budget speech that the latest figures then available, which referred to February of this year, showed that since October, 1951, real wages—that is, after allowing for the rise in the cost of living—had risen by 6 per cent., and that by October, 1954, earnings in industry, again in real terms, had risen by 9 per cent. Since February, there has been a further marked increase, and, in the two months of March and April, wage rates have risen by nearly 3 per cent., while the cost of living has risen by less than 1 per cent.
Real wages, therefore, have risen by a further 2 per cent. or more since I gave the latest figures in my Budget speech, and, over the last 12 months, the cost of living has risen by 31 per cent., but wages have risen by 7 per cent. It is important, in view of these figures, and of some of the rather extreme statements made by—

Mr. James Callaghan: Very good.

Mr. Butler: When the hon. Gentleman says "Very good," I also say very good, if we increase our productivity. Everyone wants to have better rewards, but the only way of achieving them is by an increase in production and productivity.
In the light of facts such as these, it is simply not true to say that over recent years the wage-earner has not been receiving his fair share of the increase in all personal incomes. I hope the House will listen to these figures. Betwen 1948 and 1954, the total of such incomes rose by 45 per cent., while the total of wages and salaries rose by over 50 per cent. By comparison, the total of incomes derived from property—that is, rent, dividends and interest—rose by only 28 per cent. It is important for the House, and in answer to the argument of the right hon. Gentleman opposite, to get some of these things in a little better perspective than we have done so far.

Mr. Austen Albu: is it not a fact that the spending power of ordinary shareholders has gone up by at least four times in the increased dividends returned over the last year?

Mr. Butler: There has been considerable spending power in the hands of shareholders, but, of course, it is very


wrong to imagine that all shareholders are bloated capitalists. There are a great many, as can be found from inquiry from any large company, holders both of equity and Government stocks, who are very small people indeed, who have put up very small sums on which they want to get some reward.
To sum up the position, we must all recognise that this situation, in which the price level rises, however gradually, and wages rise with it, can have very dangerous consequences for a country which depends for its livelihood on being competitive in the export trade. Obviously, we must try to keep domestic prices stable, and we do not need lectures from the Opposition on that subject, especially when we reflect on the rise in the cost of living under their regime and that under ours.
We do not think that we can escape the severe test of international competition by distorting the true level of our costs at home. Our internal prices have been rising in recent years, simply because money incomes have been rising disproportionately and forcing up costs. It is quite unrealistic to expect to check this dangerous process by any artificial methods of government, such as subsidising prices. In our free system we must restrain our demands for greater rewards and see they do not exceed productivity, which alone can bring about those greater rewards.

Mr. H. Rhodes: Surely this is an opportune moment to make some reference to dividend restraint?

Mr. Butler: If I may, I should like to finish my speech in my own way, taking account, of course, of the hon. Member's point. I have dealt with the points of the right hon. Gentleman the Member for Leeds, South and have attempted to give a fairer picture of the situation than he, not only in respect of the relationship of Government policy to the strikes but in every way.
However, I do not wish to detain the House long, and I shall summarise the general philosophy in which we believe as follows. We believe in the policy of expansion which has been extremely successful in restoring prosperity and

liberty to our people, in doing away with rationing and restrictions, increasing the amount of food, and increasing the production and employment of our people. We believe that this policy of expansion can be successful only through the dual policy of incentive and discipline, and we shall continue with both those aspects of our policy, using them as they are needed.
Incentive has been seen in the greater rewards of the wage-earners and in the fact that between £700 million and £800 million of taxation has been restored to the pockets of the taxpayers in the last four Budgets. We have also improved the position particularly for the lower-paid wage-earners in the tax reliefs which we have given them; to the wage-earners drawing under £10 a week £116 million of tax relief, which is a very remarkable figure to which attention is not paid sufficiently in our debates.
We have increased social benefits in almost every particular. We have looked after those in need. We have increased our education and health programmes. We have done all this at a time when we have been carrying out a very big defence programme, and we have managed to maintain our position of leadership in the world, due to our economic strength at a time of particular importance in world history.
Our object is to place more responsibility on the individual and less on the State. We believe in a really working free enterprise system. We believe in the control of selfishness and restrictive practices. [Laughter.] Hon. Members may mock, but I wish to say this to them. We are at the beginning of a new Parliament. The President of the Board of Trade has already made a statement on our attitude to monopolies.

Mr. R. R. Stokes: Not very good.

Mr. Butler: It was comprehensive, and the right hon. Gentleman will find it a great deal better when he studies it.
We are against the biggest monopoly of all, nationalisation. We are in favour of finding through profit sharing and in any other way we can, although we realise the limits of profit sharing, the best possible method of conducting industry. If I were to refer again to Professor Lewis's


article, I should say no more powerful argument could be found against the abject failure of nationalisation. He brings out this clearly.
We should like the House in the opening months of this Parliament and the opening period of this Government to find better methods of conducting our industrial relations and better methods of conducting our affairs generally. We believe we can get them if we have the advantage of the sincere help of hon. Members in all parts of the House. We shall offer in respect of profit sharing that the Inland Revenue will help any firm to get ahead that wishes to bring in a good scheme likely to help its workers. We shall offer, in dealing with the general economic situation, all the resources of the Government. We cannot work without the help of the T.U.C., or without the help of the people, and, above all, we cannot work without the help of this House.
So, in answer to this Amendment, I say that we have before us the opportunity of carrying forward the good work we have done over the last three and a half years, and we have the opportunity of carrying it forward in the right spirit if hon. and right hon. Gentlemen opposite will accept our invitation to help. We have the opportunity of finding methods better than any in the programme of right hon. Gentlemen opposite, and to enhance the advantages of our own programme and our own record.

5.25 p.m.

Mr. A. E. Oram: As this is the first occasion on which I venture to address this House I shall not attempt to cover the whole range of subjects mentioned in the Amendment moved by my right hon. Friend the Member for Leeds, South (Mr. Gaitskell). I want rather to draw attention to the last phrase of the Amendment, which expresses doubt whether this Government are likely to bring about a more equitable distribution of wealth. I very much share that doubt.
Last Thursday, and again at Question Time today, we heard the Prime Minister—and we have just heard the Chancellor, in his concluding remarks—refer to such things as profit sharing and co-partnership. We have heard the phrase "property-owning democracy." These

phrases, if they were taken at their face value, would lead us to believe that ordinary working people are now to be invited to enter the citadel of property ownership from which, hitherto, they have been almost entirely excluded. I do not believe that we are likely to see any such transformation under this Government. Indeed, I doubt whether the Government realise the full implication of a phrase which they have attempted to make their own, the phrase "a property-owning democracy."
What is the present position with regard to the private ownership of capital? The most recent estimate I have seen is that given by Mrs. Kathleen Langley, in the Bulletin of the Oxford University Institute of Statistics for January, 1954. I shall not trouble the House with any of the details of the analysis which she makes, but shall content myself with the general conclusion which is to be drawn from the tables which she gives. That general conclusion is that two-thirds of the adult population have virtually no capital holdings whatever, but at the other end, the top end, of the scale a mere 1½ per cent. of the adult population own as much as 50 per cent. of the privately-owned capital of the country. So, clearly, our present situation is that we are very far indeed from a property-owning democracy. Indeed, our situation can more properly be described as that of a property-owning oligarchy.
We can recall, those of us who know anything of the development of political institutions, that the change from political oligarchy to political democracy was a painful process, and a process resisted by those who enjoyed the power of oligarchy. I should say that in the economic sphere, also, the change from an economic oligarchy to an economic democracy is likely to be a most fundamental and a most difficult and, to some people, a most painful process, and one which is most likely to be resisted by those who at present enjoy the advantages of the existing situation.
What are the methods which the Government invite us to believe will enable this change from the present situation to that of a property-owning democracy to come about? Apparently, we are to rely upon profit-sharing schemes, of which the most recent examples have been those of Imperial Chemical Industries and, even


more recently, of the Rolls-Royce Company. Before we become too enthusiastic about these things, I invite the House to consider the very modest nature of some of these profit-sharing schemes. In his concluding remarks, the Chancellor himself threw in an aside that he recognised their limitations. Imperial Chemical Industries, which makes a trading profit of about £39 million per annum, proposes to distribute to its workers something which will cost that combine no more than £400,000.
When we look into these schemes we find that in every case they are little more than a few crumbs which are allowed to fall from the rich directors' table. But even more important is the question of control, and none of these schemes in any way envisages the passing over of control to the workers in the industry, whatever the particular financial circumstances of the scheme. I would refer the House to the "Economist" of 22nd May last year which, in commenting on the I.C.I. scheme, said:
The annual issue of 500,000 shares to employees would in time confer upon them a substantial interest in the company, but"—
and this is the important point—
not one that is ever likely to wield control, for there will be £190 million of Ordinary capital in issue when the scheme begins.
That, of course, is the whole crux of this matter of the redistribution of property.
It is a complete misnomer to suggest that democracy can be applied to these schemes. As I conceive it, democracy means putting power into the hands of ordinary men and women. These profit-sharing schemes never do and never will do that, and I have very little faith in them. I believe that they will not bring about any radical redistribution of ownership, and certainly no radical redistribution of power.
If I reject the schemes, the House is entitled to ask in what I put my faith to achieve what I believe to be the desirable objective of an economic democracy in our industrial and commercial affairs. There are a number of methods. If I am fortunate on future occasions in catching your eye, Mr. Deputy-Speaker, perhaps I shall have the opportunity of dealing with some of them. This afternoon I propose to deal only with one, and that is the method which we employ

with great success in the great Co-operative movement, of which I am proud to be a loyal and active member.
It is not always realised, and certainly not in the House, that we have in the Co-operative movement a very tine example of a real property-owning democracy. If we look at its property-owning aspects, we find that it has assets worth about £600 million, which is a tremendous and magnificent achievement when one realises that these assets have been built—quite literally—out of the pennies and shillings and hard toil of millions of ordinary working people over the years. That commercial undertaking of the Co-operative movement is now larger than the industrial capitalist combines such as Unilever and Imperial Chemical Industries, but there is a vital difference. Whereas those are the property of a comparatively few shareholders, the ownership of the great Co-operative movement is in the hands of nearly 12 million ordinary men and women with an average shareholding of little more than £20. That is the property-owning aspect of this Co-operative movement.
What about its democracy? It is a cardinal feature of our organisation that one man or one woman has only one vote, in contradistinction to the system of capitalist concerns where voting power goes according to wealth and the possession of shares. In a Co-operative society a man who has £1 has equal democratic rights with a man who has £100, and it is impossible to buy control in the Cooperative movement. It is men and women who count and not the wealth which they possess. In the board rooms all over the country every week, evening after evening, the affairs of the Co-operative movement are carried on by laymen—by railwaymen, housewives, miners, engineers and ordinary working folk who are there by virtue of the fact that they have been democratically elected by their fellow co-operators and willingly give their time to serve this movement of which they are rightly proud.
If the word which is being discussed is "co-partnership," I would direct attention to what I believe to be the only real form of co-partnership—the Co-operative co-partnership societies, of which there are interesting examples in the Midlands and in London. They are


a very different form of social organisation from the co-partnership schemes which we hear spoken of from the benches opposite and from the Liberal Party. The vital difference is that in the Co-operative co-partnership societies there is a very real measure of workers' control. Two-thirds of the members of the management committees of these societies are actually workers on the floor of the factory. I claim that to be a very real measure of industrial democracy, just as I claim that the wider, bigger, consumer Co-operative movement is a very real example of commercial democracy.
We have been very glad to welcome a development since the end of the war in co-operation among farmers. They have learned that it is possible and valuable to do together in co-operation things which they used to try to do, and very often failed to do, alone and individually —the purchase of machinery, the cooperative purchase of seed and fertilisers and the co-operative marketing of their produce. There has been a remarkable development of that kind of thing, and in that connection the valuable work of the Agricultural Co-operative Association, Ltd., has much to commend it.
I believe that there is no sphere of human endeavour in which it is not possible for the principles of co-operation to be applied with very great advantage. I believe that it is possible for consumers, industrial workers and farmers to come together, as we have proved they can come together, and establish their co-operative societies with very great effect. They eliminate profit rather than share it. They eliminate the privilege of wealth. They act on democratic principles of election and, as I have said before, in their organisations men and women count rather than wealth.
All too often democracy is regarded purely as a political concept. We think in terms of political parties, polling booths, ballot papers, town halls and Parliaments. All that is vitally important, and I do not disregard it, but, in my judgment, democracy is, and ought to be conceived as, very much more than that.
We need democracy not simply in politics. We need democracy in commerce, in industry, in agriculture and in the whole conduct of social affairs. Only when we have achieved a society which

is democratic in all those varied senses can we rest content that we have achieved a truly democratic society, a society which, I know, all Members of this House claim to set as the objective of their work but a society which some of us in this House, notably on this side, are determined that we will do all we possibly can to achieve.

5.42 p.m.

Sir Robert Boothby: It falls to my lot to congratulate the hon. Member for East Ham, South (Mr. Oram) upon his maiden speech, which is always something of an ordeal. I do so with great pleasure. It was excellent. Indeed, the hon. Member might have been here for years. He dealt with what seems to me to be perhaps the most important theme of this debate. He dealt with it very well, and with what was obviously total sincerity. He will not expect me to agree with everything he said; in fact, I do not. I shall have something to say about it a little later. Meanwhile, I am sure that hon. Members on both sides of the House will join in my felicitations to the hon. Member and when I express the hope, which is not merely a conventional hope on this occasion, that we shall often have similar and as good interventions from him in the future.
Perhaps hon. Members will forgive me if at the outset of my speech, which, I hope, will not be very long, I make a brief reference to my own constituency, where there is a high incidence of unemployment in what is known as the Buckie-Peterhead area. Three years ago, my right hon. Friend the President of the Board of Trade, to whom my remarks are now directed rather than to my right hon. Friend the Financial Secretary, announced a so-called Buckie-Peterhead scheme. I had considerable misgivings at the time, and hastened to my constituency to express them. I said immediately up there that I did not think that very much would come of the scheme. It is a mercy that I did so, otherwise my majority at the recent Election might have been considerably smaller. I warned my constituents that there was not much in this business; and, indeed, there has not been. In fact, I am sorry to have to report that up to date it has been a dismal fiasco.
So far as my own constituency is concerned, since the scheme was launched one factory has been started, and that was mainly due to the efforts of the Provost of Peterhead rather than those of the President of the Board of Trade. The officials of that Department have told me that although the scheme was launched with a considerable flourish—I do not quite know why—by the President of the Board of Trade, there is very little that they can do under it. They do not have any money, and that is the important thing in these matters.
If a scheme is being launched to deal with unemployment, there must be some "dough." The trouble is that there is no "dough" in this scheme; and that is what I am complaining about, quite crudely. Something can be done if a district is turned into a Development Area, or if direct financial facilities are given in the way of grants and loans to companies which are willing to set up an industry; but if we simply say, "Here is a scheme and we hope very much that everybody will go up there," and then sit back and, when anybody asks for a little help to go there, tell them that they can get nothing, we cannot expect much to come of it.
I am going to give my right hon. Friend a last chance. I have one more practical proposition to put before him—not now, but tomorrow—for a berth and a launching slip for the construction of steel diesel-engined trawlers, which would give considerable employment and do a lot of good to Peterhead, and would have the additional advantage of being an ancillary to the fishing industry. I hope that my right hon. Friend will really look into this suggestion and try to do something, because up to date, if I had not issued appropriate warnings to the inhabitants of the area, they would have suffered considerable disappointment. Certainly, the incidence of unemployment has in no way diminished during the past three years.
I turn now to the general problem that the House is discussing this afternoon, a problem which is to me of absorbing interest. I think we are all agreed that economic expansion is a continuing political and social necessity, especially in a free enterprise economy. The problem that confronts this country, and also the

United States of America just now, is how to maintain the momentum of an expanding economy without encouraging inflation, which can all too easily become extremely dangerous.
My right hon. Friend the Chancellor of the Exchequer said a word or two about hire purchase, and I was quite glad to hear from him that the restrictions he has imposed on hire purchase have had some effect in diminishing home demand. I do, however, want to put one point to him, and I think it is a perfectly genuine one. Furniture comes into an altogether different and separate category; quite different from, for example, motor cars and television sets. Furniture is essential. Young couples who now have houses, thanks very largely to the Government—[HON. MEMBERS: "Oh."] Anyway, we might as well take what credit we can. Why not? We all said it a great deal at the Election, and I do not see why we should not repeat it now. Thanks very largely to the policy of the Government, young couples have got the houses. But a house is not much use unless it has some furniture in it.
It is no use expecting that at present prices ordinary young couples, just starting out in life, can afford to pay in what my right hon. Friend the Chancellor of the Exchequer referred to as the "proper way." Unless he included reasonable hire purchase terms in the "proper way," they cannot pay cash down for beds, wardrobes and all the rest of it. This is a real grievance, and I want to press it very strongly. The Government should look into this question of furniture right away, because it is not only the furniture trade that is suffering—and that is working short time, laying people off and suffering from unemployment. It is the young people starting in life who are suffering, who can only buy their furniture under the hire purchase system. This is a specific point under the Regulations that requires the immediate and urgent attention of the Government, and some remedy.
Having said that, I come to a conclusion which will probably be shared by hon. Members on both sides of the House, although we may disagree about the methods as to how to get it. The best answer to inflation, and to the danger of inflation, clearly lies in increased productivity. This old horse has been


flogged up the road and back again; but it is a genuine one, and we ought never to leave it far from our minds. It requires a new attitude on the part of the workers, of which I now see very definite signs. There was a long period after the war when the memory of the 'thirties and of unemployment was too vivid, and when there was a real fear of flat-out production because of the possibility of unemployment. I think that that fear is gradually beginning to subside, and it is a very good thing.
The other way of getting increased productivity, apart from a willingness on the part of the workers to work for it, is productive investment. The duty of the Chancellor of the Exchequer is not to discourage spending as such—but only unwise spending. He can direct investment policy in many ways, and this direction is the basis of strategic economic planning. We are all agreed that we must have a strategic plan for the national economy as a whole. Investment policy is the core of this. The continuous modernisation and re-equipment of our industries must be a prime object of any sound economic policy, and should be encouraged in every way by my right hon. Friend.
I was rather pleased at the emphasis the Chancellor laid on this in his speech, and especially when he said that, in spite of all the difficulties of recent weeks, he could not discern any great slackening in productive investment in this country. I thought that was the most encouraging feature of a speech which in itself was not at all discouraging. But we must go on, because we can never hope to increase exports by repressing industrial development. That is a policy of desperation. An increase in productivity and exports is by far the best answer—indeed, it is the only effective answer to inflation.
A further word about investment. I want to compare the position in this country with that in the United States where the rate of new capital investment per worker employed is now about five to six times greater. What is the result? Output per worker has doubled during the past 25 years in the United States, and has been accompanied by a sustained rise in salaries and wages. This is really part of the answer to the hon. Gentleman the Member for East Ham, South. Four times greater than that of the rise in

dividends in the United States over the past 25 years has been the rise in wages and salaries. This surely points the way.
I read the other day a rather interesting article in the "Economist"—sometimes it has interesting articles—which drew a distinction between the psychological attitude of America and Russia towards investment and that of this country. It said that America and Russia were both capital-conscious and investment-minded. That is broadly true: although their economies are very ditierent—one is free and the other is far from free—they are both intensely conscious of the need for capital investment.
The "Economist" went on to say that instead of being investment-minded as they were, we were still primarily consumption-minded. There is an element of truth in that statement. Our economy is not sufficiently dynamic or flexible; and I do not think we concentrate enough on the modernisation of industry. We think a great deal about what we consume, and rather less about how we are to produce what we want to consume in the future.
We have heard a lot in this debate about the Stock Exchange; and in that connection I say frankly that I would like to see the workers of this country, as their prosperity grows—and it is growing—becoming much more equity share-minded than they are at present and buying some of the shares that rise so much. [An HON. MEMBER "Where will the money come from?"] Here I have a constructive suggestion for the Chancellor of the Exchequer. My right hon. Friend might make it a little cheaper for them to buy these shares by reducing the Stamp Duty. Then we could all buy a few Imperial Chemical Industries shares, and perhaps one day sell them at a profit without having to pay tax.
On investment policy, to which I attach prime importance from the point of view of combating inflation, I want to make three concrete suggestions to my right hon. Friend. The first is that if in the future he finds it necessary to take another pull at the reins, as he may well do if the balance of payments situation is affected in a little time by the dock strike and one or two other factors, I hope he will consider a discriminatory tightening of credit, which he can perfectly well do, rather than a further rise in Bank Rate; because that would tend to discourage


investment in industry over a wide range, and also would be rather discouraging to agriculture.
Now that the Chancellor has come back into the Chamber, I must say again that he has immense power in this country over investment policy. That is how he exercises a strategic control over the national economy. It is all Keynes —whether it is done by a tightening of credit, by raising Bank Rate, or by fiscal or non-fiscal controls. It is just a question of the choice of method at any given moment. My right hon. Friend is a most distinguished Cambridge graduate, and therefore a good Keynesian, as he should be, because Keynes was the man who taught us all this.
My second suggestion is that the proposals of the Government for capital investment in transport in this country are quite inadequate, in view of the fact that we have invested practically nothing in our transport system since the war and are far behind many other countries, not only the United States but most countries in Europe, particularly France. I am not talking about the railways at the moment, because I think the less said about them just now the better. The roads are grossly inadequate for the weight of traffic which is put upon them, not only every year but every month and every week; and the carnage on the roads is only one result of the inadequacy of our road system. I am talking now not only of trunk roads, although they are disgraceful. Think of the most ancient turnpike in this country, from London to Dover. Think of Maidstone, think of Ashford. Both are an absolute scandal. Think of the Staines block which affects the wretched people going west. Think of the Great North Road, where one runs into a succession of goods trains coming steaming and flaring at one with smoke and fire. I found myself cowering in the ditch in sheer terror the other day in order to let one of these great trains get past. It is not only the trunk roads but also the unclassified roads, of which there are thousands of miles in Aberdeenshire alone. If these were put into proper order, and were thereafter maintained by the County Council, it would add enormously to the efficiency of our farming, as I am sure all hon. Members who

represent agricultural constituencies would agree.
My final specific point about investment is that my right hon. Friend should continue to encourage in every way investment in the Colonial Empire, because an assured supply of imports from primary production within the sterling area will go far to restore our international solvency. We have benefited from it enormously since the war; and although I know that the aggregate amount available is limited, I am sure this House would agree that every encouragement should be given to this form of investment.
This leads me directly to a consideration of something which has been mentioned in more than one speech today, monopolies. Here I want to utter a word of warning. I was delighted when I heard the President of the Board of Trade say, "We reject the view that all monopolies ought, by a massive piece of legislation, to be swept away." We can easily be carried off our feet in this connection. Restrictive practices on both sides of industry should be dealt with, because they exist amongst both the trade associations and the trade unions. So-called monopolies are a more difficult matter. It is easy to dismiss them as such, but we should remember that there are monopoly buyers as well as monopoly sellers, of which some are Government Departments and some are nationalised industries. In these cases prices are often fixed in relation to costs, as the right hon. Gentleman the Member for Ipswich (Mr. Stokes) said earlier today; and that, I agree, is a good thing. I am merely arguing that there is a lot of free, easy and rather unwise talk about monopolies.
My mind goes back, as it must, to the 1920's and 1930's when, for example, the coal and steel industries of this country were subject to ruthless, relentless, internal competition, so violent that when the Germans wanted to reach some kind of agreement to fix basic prices for coal, I remember Thyssen saying to me in Dusseldorf. "How can I speak to your coal industry? They will not even speak to each other." In South Wales, Durham and Northumberland they were fighting each other to the last inch, with every ton of coal being sold under the cost of production and in heavy competition between different parts of the country.
I am sure that that kind of competition is wrong. It was the same in the cement industry, which is now under criticism. Indeed, I remember that in the 1920's we regarded Sir Malcolm Stewart as a hero when he pulled the cement industry together. Did he raise prices? He did nothing of the sort. On the contrary, he made it one of the most efficient industries in the world; and the only result was to increase efficiency and to reduce the cost of production. In those days it was not a question of slamming monopolies mercilessly; we were all arguing for rationalisation—a rationalisation of industry which they carried to its logical conclusion in Germany, and which became the basis of Hitler's power in 1940–41.
I remember Sir Alfred Mond, Sir Robert Horne, and many Members of the House talking in these terms. if we take the cement industry, if we take I.C.I., if we take the Associated Electrical In-tries, if we take Unilevers, where shall be find more efficient industries in this country, or in the world? I therefore say, let us be careful before we allow ourselves to be swept off our feet to too great an extent by catchwords. Deal with restrictive practices—yes; and also with any arrangements which operate against the public interest. But let us look very carefully into an industry to see whether in fact those things exist before we lay rough hands upon it.
I turn for a moment to trade. The right hon. Member for Ebbw Vale (Mr. Bevan) once said that there is no bottom to uncontrolled competitive international trade but the rice diet. [HON. MEMBERS: "What?"1 He was trying to convey a state of abject poverty in a phrase which is a little picturesque for me, and which I therefore apparently could not quite convey to the House. It was his method of saying that it was the end—a rice diet. There is a germ of truth in it. Trade should not be war. Trade is, and should be, the mutually advantageous exchange of goods between countries. Heaven forbid that we should go back again to an international economic war of attrition, which is what brought us all down in the period between the wars, and very frequently before the First World War.
On trade I have three quick suggestions to make. First of all, the Chancellor referred to the United States and liberalisation a little more hopefully today than

on the last occasion; but the fact remains that we shall not get any great liberalisation of trade in the United States, for the reason which I have stated to the House so often: they do not want manufactured goods in large quantities because they make them themselves. That is the simple answer. We can get a little more flexibility; but in fact the amount of our trade with the United States will necessarily be limited by the amount of our dollar earnings, which in cludes dollar gifts as well. We cannot buy more in the United States—and should not buy more in the United States —than we can buy with the dollars which we earn, or the dollars which we are given for that purpose. That will be the limiting factor in our trade with the United States.
One factor which worries me, as I think it must worry the Chancellor of the Exchequer, is the existence of enormous farm surpluses in the hands of the Commodity Credit Corporation. I fear an attempt sooner or later to dump some of these farm surpluses in this country and in Europe generally, and I do not like the idea.
I agree with the Chancellor that in the last 18 months we have been importing far too much feeding stuffs for which we have had to pay dollars; and, I think, too much cereals generally. I dread the possibility of an attempt being made by the Commodity Credit Corporation to dump these surpluses, which are still piling up and are now gigantic. We have at the moment no protection against that. I should like the Minister who is to reply for the Government at the end of the debate to tell us that if necessary we shall protect ourselves against this by non-fiscal methods—not simply by raising the Bank rate, which will not do very much to help in that situation but, if necessary, by controlling imports.
While I am on this topic, there is another point which I should like to raise. I do not know whether the British taxpayer can go on subsidising cereal imports to the extent to which he now does. In the old days the levy subsidy principle worked not too badly. I think this is a question at which the Chancellor should look very carefully, because I think we are importing an excessive amount of cereals and, in particular, far too much feeding stuffs, from the dollar


areas. As a representative of a great oat-growing area in the North of Scotland, I can tell my right hon. Friend that we can do a lot to help if we are given the necessary encouragement.
The second point I want to make on this subject is that we should co-operate as closely as we can with the European Coal and Steel Authority, which is doing a good job and which is the most effective form of economic integration in Europe that has yet been developed. Finally, I agree with the right hon. Member for Huyton (Mr. H. Wilson) that it is time we had a revision of the strategic list for East-West trade. We ought to be doing more trade with countries East of the Iron Curtain—with Russia, with the countries of Eastern Europe and with China.
I should like to know what has happened about the Rumanian Trade Agreement, which we were recently trying to negotiate. I went to a very good lunch at the Rumanian Embassy some time ago and they were quite encouraging. I thought they had some good products, one way and another; and I had it in mind that we might exchange some of our herrings for them. They seemed to be quite sympathetic to the suggestion, but they said something about pre-war debts which might have to be cleared up first. I should like whoever is to reply for the Government to say a word or two upon this matter, because I thought there were real possibilities of trade in herrings from our point of view, and in brandy, which was far from bad from theirs, as well as fruit, caviare and various other commodities which I think we might properly consume.
I am sure the Chancellor would not expect me to close without saying a word about convertibility, of which, as he knows, I have a pathological terror—as anybody must have who sat and served in the House through the Chancellorship of Philip Snowden and, I must add, the right hon. Member for Bishop Auckland (Mr. Dalton). The latter tried to take us back to the gold standard in 1947, while Snowden kept us on it in 1931—and both were wrong. [HON. MEMBERS: "And the right hon. Member for Woodford."] Never mind that.
Convertibility is often in danger of becoming a catchword. If ever it comes

it will be the outcome of conditions, including a balance of trade and adequate gold and dollar reserves, which do not yet exist. I want to put this point to my right hon. Friend the Chancellor: what kind of convertibility have Her Majesty's Government in mind as a longterm objective? Is it on the basis of fixed exchanges? That is tantamount to a return to the gold standard, about which the late Ernest Bevin said, when he was still a member of the Coalition Government in 1944:
There must be no return to the gold standard. It cannot be in our interests, or anyone else's, to join in a policy of collective suicide.
The theoretical price paid at Bretton Woods for fixed exchanges was adequate gold and dollar reserves; but Bretton Woods did not provide them, and we have not got them now. I want to repeat what I have said more than once in the House: fixed exchange rates with unco-ordinated national monetary policies and accompanied by non-discriminatory multilateral trade, cannot be made to mix in the modern world. If my right hon. Friend wants to proceed along this path, I would ask him to consider the possibility of starting by perhaps having a flexible exchange system, flexible rates, between sterling and the currencies of the European countries, under the auspices of O.E.E.C. This would involve the continuation of O.E.E.C. and, under it, of E.P.U., with the credit facilities associated with it, which we do not want to give up.
Meanwhile I would just remind my right hon. Friend of the warning contained in the last E.C.E. Report from Geneva:
The British Government's declared intention to support transferable sterling rates in free markets abroad near the official parity appears to be a doubtful method of strengthening the sterling area's dollar balance … by providing an advantageous form of quasi-convertibility.
I do not know how much the Exchange Equalisation Fund has lost in supporting sterling in the free markets, but I think my right hon. Friend would be well advised to allow confidence in sterling to do the job itself and, if there is any fall in the exchange rate, I do not believe that would be so damaging as losing dollars through the Exchange Equalisation Fund.
In conclusion, I come back to the speech of the hon. Member for East Ham, South. The supreme task is to build a


free and functioning industrial society in which the workers in this country will be given full economic status and a direct interest in the prosperity of the companies or industries in which they are engaged. There may be different views about how this can be accomplished, but there can be no doubt about its desirability. It certainly requires a new code of industrial relations based on personal responsibility. That is the most important thing; and there must also be a redefinition of the relationship between the trade unions who supply the labour, and the managers of industry who supply the skilled direction.
Economic power has now passed from the owners of property, as such, to the managers and to the trade unions. We have really come into James Burnham's managerial society—and we have not yet accustomed our minds to that fact. What we have to do is to give these people who hold the power a legitimate basis for it. I do not think that nationalisation is the answer. I do not want to raise any controversial issues, but I do not think that it is. All I say to hon. and right hon. Gentlemen opposite is that they will have to do a lot of hard thinking about nationalisation during the next four years, if they are to have any hope of coming back to this side of the House. But we on our side have a lot of thinking to do, too. We have set our hand to this task, and it is a formidable one.
The only way to give the managers and the trade unions a really legitimate basis of power is to build a functional and decentralised industrial democracy, as the hon. Member for East Ham, South has just said. This is a vast theme and I do not have time to go into it now. Of course, as he suggested, the co-operative movement has a great part to play; but not the only part. They should be encouraged; but there are also growing up in our factories incentive payments and schemes of work study, and share distribution. The I.C.I. scheme is not to be scoffed at. It is very valuable and important and points the way. It is a method of using profits to redistribute wealth to the workers of the country. Finally, there is the not unimportant question of the representation of workers on the boards of some of the big companies. All this has to be

studied. It is immensely interesting, immensely exciting and full of hope.
Last, but not least, I should like to stress the part that information has to play. The workers in many industries are too often kept in the dark by managements and boards about the objectives and purposes of the companies' policies. Sir Oliver Franks in a very interesting pamphlet published some time ago said:
A purpose is an idea, the product of the intellect; but it is also an idea affirmed by the will so that it becomes an objective of action. If it is to be the purpose of the members of the organisation, it must be communicated and commended to them so that it is accepted as the common objective of their joint action. Without the act of intellect, the act of will and the act of communication, unity of purpose cannot be achieved.
There has been too little direct communication in the past in industry in this country between management and workers, too little information as to what the objectives are, what is happening, and what it is all about.
The term "property-owning democracy" has been used again in this connection. That phrase was originally coined by a man whom you, Mr. Deputy-Speaker, and I knew well and whose premature death was a great loss to this House, the late Noel Skelton, the former Member for Perth and an energetic Under-Secretary of State for Scotland. Incidentally, he put me into politics; it took me a long time to forgive him for that. He was a man who devoted his whole life to the cause of a genuine property-owning democracy based on small ownership of land and on co-partnership and profit sharing in the broadest sense of the term. He studied it and worked for it all his life, and now that his aspiration seems likely to be realised, I wanted to pay this tribute to his memory.

6.16 p.m.

Mr. Gordon Walker: We have listened to a characteristically wide-ranging, friendly and ebullient speech from the hon. Member for Aberdeenshire, East (Sir R. Boothby). The general tenor of his remarks was received with greater agreement on this side of the House than by the Chancellor of the Exchequer, because, although the hon. Member made a number of flattering comments about the Chancellor, the whole tenor of his speech was an implied attack upon all


that the Chancellor has been saying today.
The hon. Member said that we needed a strategic economic plan. He said that we wanted to influence and direct the flow of investment and, above all, he said that we wanted a discriminatory tightening of credit instead of the use of the Bank Rate. He also said that we should check the import of feedingstuffs. That was asking the Chancellor to do the very things which he told us at considerable length he is not doing and has no intention of doing.
The Chancellor began his speech by saying he intended to tell us about his positive economic policies, but he did nothing about it at all. It was the same old formula—the Bank Rate, and no other control but the Bank Rate and none of this directing of credit or discriminatory tightening of credit; only the Bank Rate and the general run of pious hopes which we always hear from the Chancellor of the Exchequer. Lectures were read to the workers, but no lectures were read to the shareholders or directors of companies to control the distribution of dividends. Indeed, I was hoping that the hon. Member for Aberdeenshire, East, after what he said, would look at our Amendment and would not be altogether against the terms in which it is expressed. I would not go so far as to ask him to vote for it, but to give it intellectual assent.
The Amendment brings out very well the leading characteristic of the Gracious Speech which is the best example we have yet had of the confidence trick which the Chancellor has been playing on us all, and with which we have been getting more and more familiar over the last three years. This confidence trick is to conceal the fact—and, incidentally, to conceal it from the hon. Member for Aberdeenshire, East—that the Chancellor has been depriving himself and the country of any means of achieving specific economic objectives, because he is depriving and has deprived himself of any means of achieving policies. He tries to conceal that fact by speaking in rather banal and platitudinous terms of aims and objects with which everyone agrees.
On the economic side, the Gracious Speech consists of a whole string of

objectives equally unexceptionable and unattainable under the Government's present policy. The Chancellor sets out desirable things without any hint how they can be achieved. The Government no longer have the power or the will to use any means save the Bank Rate, to achieve any specific objectives whatever—in the fishing industry, or anywhere else.
So, instead of having what we ought to have had in the Gracious Speech—a statement of policies—we have had this string of platitudes. There is, however, some method in the Chancellor's platitudes. He is setting up this amiable smokescreen behind which the realities of Conservative economic policy are going to continue to develop. The realities are quite simple. They have been stated by my hon. Friends before this debate and today. They are simply that the rich are to get richer during the next five years, just as they have in the last three and a half years, and the Chancellor is to try to keep the mass of the people quiet by throwing them scanty crumbs from the rich man's table.
In the Gracious Speech we see a general economic strategy developing which ought to alarm us very much. It is, first, to entrench the rich, to entrench economic privilege in this country, and then to do everything possible to guard it against counter-attack when we win an Election. That is the strategy of the Government, and I think that the remarks in the Gracious Speech about reform of the House of Lords are a part of the economic strategy of the Government, because that is their main method of guarding against the counter-attack that will come upon entrenched economic privilege.
Some hon. Members have tended to laugh at the statement in the Gracious Speech that consideration is to be given to the reform of the House of Lords, but it fills me with apprehension. It fits too well into the general economic and social strategy of the Government. It is significant that it is the most reactionary Conservatives who are keener about reform of the. House of Lords. They say, of course, that they are not going to alter its powers, but their aim is to achieve that end by indirect means, by tinkering about with the composition of the House of Lords. They think that if the House of Lords can be given some colourable pretension to claim to be representative it


can then challenge the House of Commons much more effectively than today. The Lords would only challenge the House of Commons when it had a Labour majority and never when it had a Conservative majority.
The Government, with their majority, can carry a reform of the House of Lords if they want to, but they had better be careful what they start up. This idea is quite against the spirit of our Constitution. The Constitution depends upon there being no deadlocks between organs of authority, and, therefore, we must have a second Chamber that can revise but never block and never delay.
1 would also say that if they start this they will end by the abolition of the House of Lords which, I take it, they do not want. They should remember that it was a Conservative Government, in New Zealand, that abolished the second Chamber there. It is a general view on this side of the House that the Lords are fairly well fitted now to their job of revising and that they ought either to be left alone or abolished. There is no middle position between those two alternatives that is compatible with our system of parliamentary democracy.
The purpose would be to give the Conservatives power—economic power—whether they were in office or out. The Conservatives always have the idea that they have a divine right to rule and to preserve what they regard as being a natural economic set-up. They want to guard against new economic and social policies which are bound to come, which will bring greater social equality and which they want to resist as strongly and as long and as completely as possible—such policies as a real progress in education that would make public education as good as the best that money can buy, or this idea of a new, radical, fiscal policy with a tax upon capital gains to bring to an end this source of gross, rapidly increasing, social inequality that we have today.
Of course, Conservatives do not like any of these policies that would lead to greater social equality. They are quite entitled not to introduce them when they have a majority, but they are not entitled to try to prevent a future Labour Government introducing those policies. I warn them not to attempt to block and to change the Constitution in this way.

Mr. Osborne: What is the duty of the Opposition?

Mr. Gordon Walker: The duty of the Opposition is to become the Government as quickly as it can. The duty of the Government is not to try to rig the Constitution so that the next Government cannot carry out the policies which they have been chosen by the people to carry out.
There are very few positive economic points in the Gracious Speech. One of the few fills me with great alarm. It is the reference to the Commonwealth Sugar Agreement. It will, I am sure, fill with alarm sugar producers in the West Indies, South Africa and Queensland as it is, by analogy, already filling with alarm the members of the West Indian banana delegation who are in this country at present. These words in the Gracious Speech will undoubtedly raise in their minds the fear that the Commonwealth Sugar Agreement will go the way that all the other Commonwealth Agreements have gone under this Government.
There is no attempt to explain-1 hope that someone will explain it during the debate—how the two incompatible statements in the Gracious Speech are to be reconciled; namely, that the Government intend to carry out their obligations under the Commonwealth Sugar Agreement and, secondly, that they are to end State trading. In no previous case have the Government been able to reconcile these two incompatibles, and that is why one Commonwealth trade agreement after another has been sacrificed on the altar of Tory economic dogma.
The encouragement of Commonwealth production—and the Government must accept this—demands some degree of planning. Whatever one may think of planning in the home, domestic economy, one cannot talk sense about developing Commonwealth production without some degree of planning. Commonwealth production must be made bigger than it otherwise would be if it were left to itself. That is why one must have planning. If one does not have such a policy one cannot have a real policy of developing Commonwealth production—it is just a policy of words.
That is why the Government, in Commonwealth economic affairs as at home, have the same policy, a policy of fine words and shabby deeds. It will be even


worse if the Government's economic dogmas are applied to the Commonwealth economic field instead of only to the home field. At home we can reverse and correct this policy when we win the next Election, but in the Commonwealth, if the Government carry further these economic policies of cutting away and destroying Commonwealth agreements, that will cause irreparable harm. I would, therefore, like my last words to the Government to be to beg them not to carry further their doctrinaire economic ideas in the field of Commonwealth trade and production.

6.29 p.m.

Mr. John Howard: It is my privilege, with the hon. Member for Itchen (Dr. King), to represent Southampton, and I should like to use the occasion of my maiden speech to refer to Mr. Ralph Morley, who represented the Itchen Division until the General Election and whose death occurred on Tuesday of this week.
Mr. Morley, I know, had many friends in the House. He bore an extremely painful illness most courageously for a long while, and I am sure that hon. Members would like me to express on their behalf the sympathy they feel with his friends and relatives in Southampton. In this brief reference I should like to pay my own tribute to the work which Mr. Morley did in this House on behalf of Southampton, and also on behalf of the teaching profession of which he was a member.
As I represent Southampton, I hope that I shall be excused if I inject into this economic debate a reference to the shipping industry. As we all know, the shipping industry makes a major contribution to the economy of this country. Not only is it a considerable dollar earner, but it contributes in a large measure to our invisible exports both directly and also through the complementary services of insurance and banking. It may be inadvisable of me today to make any reference to the adverse effect of the dock strike on our exports. I know that hon. Members will have read with concern the news that the "Queen Mary" was unable to sail from Southampton for New York today as scheduled, owing to an unofficial strike which affects some of the members of

the crew. The passengers have been disembarked and have returned to London by rail.
In Southampton, we are very proud of the "Queens"—the "Queen Elizabeth" and the "Queen Mary"—and we feel that they occupy a place in shipping which is second to none. I am sure that hon. Members will agree when I express the hope that the differences at present existing will soon be resolved; otherwise, it may well be that the prestige which we enjoy in the North Atlantic passenger trade through our fine liners, particularly with the Americans, may be seriously undermined.
My main purpose in speaking tonight is to talk about co-partnership and profit sharing, for the simple reason that I have long believed in co-partnership and profit-sharing schemes over the widest possible area. In fact, I believe it to be the solution to the problems of industry, certainly a solution which would bring happy industrial relations, if we could put these schemes on a proper footing. Many concerns already share their profits. They may not share them out of the balance of profit and loss account at the end of the year, but, in fact, they share these profits at a much earlier stage. They share them at the point where they are earned, at the machine or on the work bench, through payments under bonus and incentive schemes. That is the way in which profits are already shared in industry.
I welcome the oblique reference in the Gracious Speech to co-partnership and profit sharing and also the subsequent references to the same subject. But l think that it is time we recognised the extent and the degree to which profit sharing already exists in industry. In my profession—I am a chartered accountant —we see a good deal of what is, I believe, known on a popular television programme as the "end product" of industry. We see the profit and loss accounts and the balance sheets of successful businesses; and the statement of affairs of those which are not so successful, those which, perhaps, require our ministrations as liquidators and receivers.
Generally speaking, in prosperous business there is a high degree of confidence between management and workers. Where things have gone wrong it is


almost an invariable rule that that confidence has been destroyed and permanently lost. I believe confidence to be important, that it is of major importance in human relationships; and nowhere is it more important than in industrial relations, particularly in the relations between management and workpeople.
I believe that this confidence can be fostered by an extension of profit-sharing and co-partnership schemes of all kinds, whether piecework schemes, bonus and incentive payments, pension schemes, full co-partnership, or schemes which embrace employee shareholdings as part of the set-up. I believe also that these schemes can be successful if there is a full and frank exchange of information; if everyone in a firm is taken into the confidence of the management, and allowed to see the figures, and generally to have an idea of what policy is being followed.
I believe that to be the key to harmonious relations in industry. It is the key to rising output at competitive prices. It is only by schemes of this sort that we can bring about a substantial increase in exports with a comparable substantial increase in our standard of living over the next few years.
There is a discordant note which is very evident in industry today. It arises from a failure to understand how profits are being shared. There is a feeling throughout industry that profits are not being shared out fairly. This discordant note is all too frequently amplified by ill-informed critics. The sooner we reach the point where the rôle of profits and their distribution among those who create them is fully understood, the sooner we shall reach that pitch of efficiency which will enable our standard of living to rise substantially.
As I see it, our problem consists of reconciling the interests of the three partners in industry—management, the workpeople at the bench, and the investors. It also consists of introducing a method of job evaluation so that propel rewards can be given for skill and for responsibility. Such dissatisfaction, to which I have referred, as exists today is not only confined to suspicion about profits out of which dividends are paid. It relates also to dissatisfaction over the rewards for skill, and a feeling that differentials are being whittled away and that the margin separating the skilled

and the unskilled worker is disappearing. That is causing trouble in industry, quite apart from the suspicion about the sharing of profits.
My belief is that as soon as skill and responsibility is properly appreciated we shall make a definite move towards the introduction of full and comprehensive profit-sharing schemes—comprehensive right from the workbench to the shareholder. That is the ideal for which we must strive. The task is to re-think our industrial relations in the modern conditions of full employment and expansion.
It is to be hoped that a lead will be given by the Government. Reference was made to this today by my right hon. Friend the Chancellor of the Exchequer, and I hope that he will give a lead to both sides of industry in setting up the necessary machinery to think out this problem together. One of our favourite occupations as a nation is cutting up the national cake. I am hopeful that, if profit-sharing schemes are introduced, we shall have the ingredients for a larger national cake so that the slices may be bigger.
I am sure that this can he achieved by the expression of good will on all sides. I hope that both sides of industry will co-operate and that all concerned will show a great measure of understanding and good will in discussing this problem, which, after all, is vital to the interests of this country. If we approach it in that way, I hope that the expression which I have just used, "both sides of industry," will gradually become old-fashioned, and, finally, obsolete.

6.39 p.m.

Mr. R. R. Stokes: It falls to my happy lot to congratulate the hon. Member for Southampton, Test (Mr. J. M. Howard) on his maiden speech. I remember the appalling occasion when I attempted the same exercise, now many years ago, and how very uncomfortable I felt. I would only say that the skill with which the hon. Gentleman seemed to me to deal with a wide range of very controversial issues in his maiden speech augurs well for what he may be able to do in this House from time to time.
We on this side of the House, and I am sure that I speak for hon. Members opposite as well, were grateful to the hon.


Member for the kindly things he said about Mr. Morley, who was a valuable working Member of this House. We all very much regret his death.
In the opening stages of today's debate the Chancellor emphatically emphasised the importance of following an expansionist policy. In fact, every speaker has been doing that. The Prime Minister himself said that he hoped the workers would have
in some form, an increasing share, direct or indirect, in the industry in which they work. Call it profit sharing, co-partnership, whatever you like."—[OFFICIAL REPORT, 9th June, 1955; Vol. 542, c. 58.]
It was more or less what the hon. Member for Test has been saying.
I propose to devote a few minutes to talking about how to make this larger cake, about which everybody talks, and then how to divide it up when it is made so as to ensure particularly that those people who make it get a fair share. I most certainly agree with the general point of view that it is time that we stopped fiddling around trying to re-divide the cake which we have already made. It is not nearly large enough, and we can make it a great deal larger.
I wish to emphasise four or five points, the first of which is that of efficiency. From my own knowledge of and observations in industry I am sure that both in the private and public sectors there is "bags of room" for greatly improved efficiency. Secondly, we have in this country only a limited amount of manpower. If we look at some of the SerNices—I am not going to mention them, because it only leads to trouble; no names, no pack drill—and at some sections of our industry we find that there really is an egregious waste of manpower.
I wonder whether something could not be done by the Government on the lines of what was done by the Ministry of Labour during the war. In the second or third year of the war, that Ministry had teams of people going round examining the manpower in the nationalised services and industry, and they made some very valuable recommendations. In my own factory, which, I think, is highly efficient, they were able to give very considerable help, as a result of which we managed to save 30 to 40 men.
If we are to have this larger cake, we must have greater efficiency and a better use of our manpower. I am sure that it can be done. We have only to look at the United States to see what they have been doing. Last year, they seem to have achieved what to us would appear almost impossible. They put up their steel output by 11 per cent. and in the process used 40,000 fewer men, and they put up their motor car output by 50 per cent. with only a 5 per cent. increase in manpower. We have just as good brains in this country as they have in the United States, and there is no reason why similar things should not be done here if we set about the matter in the right way.
The third point I wish to emphasise is that we have skill in this country second to none in the world, but I do not think that we encourage it nearly enough. We have heard a lot about differentials just lately, and I want to say that unless something is done, and done quickly, to widen the gap between what the skilled man can earn and what the semi-skilled man does earn, then, very rapidly, we shall find ourselves with an ever decreasing strength of skilled men.
I have some figures here of a factory which I look after, and the semi-skilled earnings are so close to what the skilled man can earn that men just will not take the trouble to become skilled. I do not blame them. The general effect has been that whereas, in 1938, we had 35 per cent. skilled men in the shops, today we have only 30 per cent. Something must be done to see that the earnings of the skilled men are really worth while.

Sir R. Boothby: What is the gap now?

Mr. Stokes: The top rate for a fitter and a turner in an engineering factory would probably be £11 a week and average £9 7s. 6d., whereas many semiskilled workers would probably earn £9 12s. 6d. a week. The average pay of the semi-skilled worker would be about £8 7s. a week. We really must put the skilled man up higher than he is today, and I hope that, in collaboration with the trade unions, something will be done about it.
The hon. Member for Aberdeenshire, East (Sir R. Boothby) spoke about more capital investment. I agree that we want


much greater capital investment in industry in order to improve the efficiency of our factories. I am sure that if we did these four things we should, in the main, produce a much larger cake. Then the question arises, how is it to be distributed? I have very definite and, may be, limited views on that. My experience of men is that they like what they can get at pretty quickly. They are not all concerned about balance sheets and reports, and shareholders' meetings. They like a bit in the pay packet on a Friday.
Therefore, I welcome what was said about the importance of the use of incentive bonuses. I am not now talking about piecework prices. If production goes up, then profits go up, and, if they do not, then the management ought to be sacked. If the profits go up, why should not the men who produce them have a cut of the swag at the time they are made? I am sure that if the Government encouraged the introduction of incentive bonuses into industry we should get greater production than we have had in the past.
It may be a small thing, and not very important in the general national scheme of things, but what annoys the average man is what seems to him the unfair allocation of free bonus shares. For the most part, bonus shares are issued to shareholders as a result of reserves built up in the industry. The reserves were not built up by the shareholders, but jointly by the management and the men. I do not say that the shareholders should not have any of the shares, but I do not see why, when there is a bonus issue, a proportion of the shares or the equivalent of the dividend on that proportion should not be made available for the men themselves. I am sure that that would remove one source of grievance.

Mr. Osborne: Is not the right hon. Gentleman contradicting what he said earlier? He said at first that his workers did not want to wait until the end of the year to get bonus shares. He said that they wanted something in the wage packet every Friday. He is now saying, however, "Give them bonus shares and make them wait." The right hon. Gentleman cannot have it both ways.

Mr. Stokes: That is quite a different thing. With an upward surge in produc-

tion, you ought to make the wage packets surge, and also put some away to reserve. As the hon. Member knows, bonus issues do not take place every year. I have been a managing director of two firms for about thirty years and only one of them has yet made a bonus issue.

Mr. Osborne: Sack the management.

Mr. Stokes: I did not say sack the management for that reason; I said sack the management if it was not making profits. A bonus issue is a different thing. It creates a great deal of annoyance to the men when it takes place. They ought to have a share in it. I have done it in my company, and it has been a great success. I have asked some of the men if they would like to give it back and they have said, "No, certainly not."
I believe that the Government—and I hope that when we get this Government out again we shall do something about it —ought to aim at raising the level below which earned incomes are relieved of Income Tax. To my mind, there is all the difference in the world between earned and unearned income. I once spoke to Ernest Bevin about this, and he said, "I do not see why a man should not earn £2,000 a year and keep it." I do not suppose that the Chancellor could go as far as that, but I am sure that one of the things that will keep young men in this country, and make them keen on increased output, is the knowledge that what they can get for their effort they may keep, up to a reasonable amount.
I do not care what is done about unearned income. The Chancellor can "swipe" the lot as far as I am concerned. On the other side, I should do something more. I should certainly go in for a policy of dividend restraint. I do not see why, when swelling profits take place, dividends should go roaring up. I think that that is quite immoral. With dividend restraint, one gets a reinvestment in the industry itself.
Finally, I would go in for a capital gains tax. I have often been puzzled why the ordinary men and women, working week in and week out throughout the year and earning a salary or wages, should have some of their earnings lopped off at the end of the year by the Chancellor in the form of tax, while the gentleman sitting in an armchair in the City, making


large sums of money on the Stock Exchange, gets off scot free because it is called "capital appreciation."
I do not see why there should not be a capital gains tax. If a man loses his employment he is not paid his average working wage. If a person is so foolish as to gamble upon the Stock Exchange and loses his money it is his fault. If he makes fat profits there is no reason why he should not make a contribution towards the Exchequer.

Mr. Osborne: How is the right hon. Gentleman going to start his industries originally if he is not going to give some reward to the people whom he wants to put up the money? If he asks me to put up money for him to expand his industry he has no right to call me a gambler. I am an investor and am entitled to the rewards of my investment.

Mr. Stokes: I am not talking about the investor being paid normal and reasonable dividends; I am referring to the people who gamble for capital gains upon the Stock Exchange. I do not think that they are a great help to industry. I agree that the shareholder who re-invests money is a help, and I propose to encourage him to put the money back, so that production can be increased and bonus shares issued, of which the workers get a part.

Mr. Osborne: This is fundamental. If I, as an investor, find the money for the right hon. Gentleman to begin his industry, surely I am entitled to increasing rewards if he has increasing success, since I have to bear his losses?

Mr. Stokes: That is the hon. Member's point of view; it is not mine. I question whether the eternal payment of equity dividends is morally right, but that is another subject.
I now want to say something about sickness among workers. I wish the Minister of Health were here. We make a great mistake in docking people's pay for the first three days when they go sick. It is a crazy way to carry on. What happens in industry is that young men, who may not mind very much because they are not married and have no responsibility, pop off whenever they have colds, but the older men, who have responsibilities and cannot afford to be stood off,

carry on working as long as possible and, as a consequence, get much worse and, in the end, have to stay away longer than they would if they had stopped working when they should have.
In one of my firms I abolished the sickness benefit wait four years ago, and as a result the average absence through sickness has gone down from 5·1 per cent. to 1·83 per cent. I put that down entirely to the fact that when the older men with responsibilities become ill they stop work at once, because they no longer have to suffer by doing so, and there is no danger of their having to stay away for an unnecessarily long time. I hope that the Government will consider that method of helping to improve general efficiency.
I now turn to the question of National Service. I know that the Prime Minister has said that this is not the time to consider the matter, when four-Power negotiations are about to commence, because it will be embarrassing. That is absolute rot. The Russians are just as realistic about this matter as we are. The situation has been completely changed by the arrival of the hydrogen bomb. Even if that were not so, our situation has changed in regard to world affairs. We are out of Korea; we are out of Indo-China; we are out of Trieste, and we are busy coming back from Egypt.
I do not believe that it is not possible even to consider the possibility of reducing the period of National Service. Surely the matter is worthy of inquiry. I am not saying this because I object to National Service; I have been a soldier and, while I did not like it very much, I do not think that it did me any harm. I make a plea for a reduction in the period of National Service as soon as possible, in order to improve the manpower situation in our industrial machine.
In my factories we get boys as they come from school. They stay with us for three years and then pop off into the Services for two years. Some of them never come back, and those who do are vastly impaired from the point of view of training, and have forgotten what they knew. The best thing from the point of view of industry would be to wipe out National Service altogether. That is not possible, of course, but the sooner we can reduce the period to 18 months, or even less, the better for all of us, and industry.
Last Thursday, my hon. Friend the Member for Stoke-on-Trent, South (Mr. Ellis Smith) spoke about the cost of raw materials and the need for an investigation into the matter. The oil industry is one which requires investigation. I have brought this matter up before. The Chancellor laughs at it and the President of the Board of Trade packs it off in a pile of rubbish. That is not a polite thing to say about somebody else's Questions, but the President of the Board of Trade today muddled the Questions up together. One of the ways to reduce the costs of production would be to reduce the price of oil. It is about time the British public understood what is going on. The oil industry is run by an international ring and it is a swindle. It costs £1 a ton to put oil into a tanker in the Persian Gulf. and the price immediately becomes £4 10s. a ton there. Why?—because it costs £3 10s. a ton or more to put oil from Texas into a tanker in the Gulf of Mexico, and the price of that oil is also £4 10s. a ton.
Why should we be held up to ransom by an international ring? There is no reason why we should not get the price of ordinary furnace oil down to £6 a ton instead of £12 a ton as it is at present. That would save our having to buy American coal at £7 a ton and wasting valuable dollars. The Chancellor of the Exchequer and the President of the Board of Trade have pushed us off with half truths, which are really worse than absolute, direct, fiat-out lies. I hope that the Minister will take note of what I am saying and get busy with his right hon. Friends.
I could not sit down without saying something about one of my favourite subjects. The hon. Member for Aberdeenshire, East was talking about the appalling condition of our roads. My hon. Friend the Member for Keighley (Mr. Hobson) also referred to that matter a day or so ago, and he wisely remarked that when we try to improve the roads we find it impossible because we are held to ransom by people who own land by the sides of the roads. The Gracious Speech makes a reference to local government and the problem of local government finance.
The truth is that our present rating system is absolutely crazy. If I own a valuable piece of land in the middle of

the Borough of Ipswich I am treated like a public benefactor, because, however valuable it is, provided I do nothing with it I pay no contribution towards the rates. If, on the other hand, I am a slum landlord—and we still have some bad houses in Ipswich—and I allow my houses to fall into an even worse state of repair, the town hall writes down my rates and I am relieved of a burden. The only person who gets stung is the diligent, enterprising, energetic chap who improves his houses or estate, because, as a result, his rates go up.
It is a crazy system. I know that the Government will not take any action because of what I am saying, but I do ask them to consider the abolition of the derating system. I cannot see why businesses like my own should be relieved of 70 per cent. of their rates. If the de-rating system were abolished it would make a difference of about £40,000 a year to Ipswich. Would the Government also realise—even if they commit a moral lie by not doing anything about it afterwards—that if they allowed local authorities to rate site values they would then bring all the land into proper use?
There has been a great deal of talk about the need for more capital goods and, at one time or another, about the need to help backward peoples overseas. We cannot help these people unless we send them capital goods, and we cannot send them capital goods unless we produce more. That is why we all want a larger cake. But nobody seems to have realised that although we apparently do our best, as a great Christian country, by sending out Christian missionaries to teach these backward peoples the Christian faith, we leave them out there on a limb and do practically nothing more to help them. The hon. Member for Aberdeenshire, East was talking nonsense just now about the amount of help which is given. The help is negligible. We spent £4,000 million a year in beating up Hitler, yet we allow the prevailing conditions to continue in these overseas territories, many of which I know personally. Communism is bound to take charge unless we do something about it.

Sir R. Boothby: I was advocating what the right hon. Gentleman is now advocating, increased investment in the Colonial Empire.

Mr. Stokes: I know. The Chancellor of the Exchequer always says, "We are doing quite well," but we have to remember that Communists are like mosquitoes. They breed in the swamps and the slums. If we get rid of the swamps and the slums we shall get rid of Communists, and it will be "good riddance for bad rubbish."
To stop the Communists spreading over the face of the earth a real and considerable sacrifice is required, perhaps giving as much as £1,000 million a year in capital goods to those people so that they may lift themselves out of the dire circumstances in which they live. And, incidentally, doing so is good business; we shall get orders in return.

7.1 p.m.

Captain Christopher Soames: I will not follow the right hon. Member for Ipswich (Mr. Stokes) in his very wide survey. In all the points that he raised there was no mention of the Amendment which is before the House. The right hon. Member for Leeds, South (Mr. Gaitskell), who opened the debate, read out the Amendment at the beginning of his speech, but, apart from that, there has been hardly any reference to the Amendment from the Opposition side of the House. It will be necessary to bring our minds back to it, and to realise that we are discussing an Amendment which is a Motion of censure upon the Government.
The attitude of the Opposition, as expressed in the Amendment and by the right hon. Gentleman who moved it, is that the policies in the Gracious Speech will bring about unemployment, soaring prices, industrial unrest and balance of payments crises. The right hon. Member for Leeds, South shakes his head. The Amendment says that those policies will not maintain employment, will not keep prices stable, will not bring industrial peace and will not improve the balance of payments position. It is the same thing, expressed in a negative form.
What memories this Amendment brings back. We heard all this sort of thing during and after the 1951 Election. The only difference between then and now is that the "warmongering" scare was thrown in for good measure in 1951 and was left out today. I am astonished that the right hon. Member for Blyth (Mr. Robens) should have added his name to

an Amendment which forecasts unemployment in the future. I should think he would be a bit shy of that this time, in view of the wildly inaccurate statement he made at the beginning of the last Parliament. We must give him this: on this occasion no figure is included. That shows a certain degree of caution and is some improvement on last time.
I do not think that there is any foundation for the assertions in the Amendment. The policies which make up the Gracious Speech are nothing more than a logical follow-up of those which were pursued by the last Government for three and a half years. We had considerable difficulty at the beginning, because we inherited a very severe crisis, but at the end of the time the level of employment was at its highest. My right hon. Friend the Chancellor of the Exchequer never had to deal with an economic crisis to the extent that successive Chancellors of the Opposition had to deal with them while they were in power. At the end of our last term of office the standard of living of the people was higher than it had ever been before.
There is no foundation of fact for the statements in the Amendment. If it is true that the standard of living is higher than it has ever been before after three and a half years of Conservative rule, why should a logical continuation of those policies bring about a complete reversal in our fortune?
The kindest interpretation to he placed upon the Amendment is that it is the best that could be produced by the Opposition in, so to speak, their period of convalescence, while licking their wounds—some of them self-inflicted—electing new leaders and conjuring up a new theme for the future. I earnestly hope that the Amendment is not the product of wishful thinking on the part of the Opposition. I like to believe that they hope as fervently as we do that the policies that the Government are to pursue will bring an ever-rising standard of life. As the policies in the Gracious Speech unfold I hope that all hon. Members who have the interests of their constituents at heart will have constant cause to cheer.
A feature of the debate has been the repeated references to profit sharing and co-partnership. They were started by the Prime Minister, when he spoke on the


first day of the debate. The matter was referred to by the Chancellor of the Exchequer, and mentioned by many of my hon. Friends. I am delighted to have heard them, because I have been surprised how little the subject has been talked about in this House in the past. The first debate, to the best of my knowledge, took place in the last Parliament on a Private Member's Motion, and I am agreeably surprised that so much notice has been taken of a vital subject like profit sharing and co-partnership.
How much more imaginative, realistic and exciting as a theme are true co-partnership and profit sharing than nationalisation. The Opposition can say what they like about nationalisation; the fact remains that the workers in nationalised industries do not enjoy that feeling of personal ownership which they were led to believe they would enjoy. [An HON. MEMBER: "Ask the miners."] They certainly do not feel that they have as much to say in management or have greater bargaining power than workers in private industry. Nationalisation has benefited nobody unless it be our competitors in world markets. As a theme, it is dead and buried. During the next four years the Opposition will do a lot of serious thinking about their policy towards industry, and they must decide upon a policy before the next General Election. I do not believe that it will be a policy of nationalisation.

Mr. Tom Brown: I am much obliged to the hon. and gallant Member for giving way. He is making rather sweeping statements without justification. Let him ask the miners whether they are having greater benefits and a higher standard of living than ever they had under private enterprise. In no uncertain terms, they will give the hon. and gallant Gentleman the answer.

Captain Soames: I really wonder whether that is so, but I will counter that by saying that in areas in which there were industries threatened by nationalisation had the party opposite been returned to power in this Election, the vote in favour of the Conservative Party rose out of all proportion. Further, it will not be for us on this side to complain if, at the next appeal to the country, hon. Members opposite say they want to nationalise a lot more industries. It will be they, not us, who will be the losers.
Hon. Gentlemen opposite will have to do a lot of new thinking about their future policy. They might consider that profit sharing and co-partnership can and should play a great part in our thoughts on industrial problems. When I talk of profit sharing and co-partnership I mean something which will give the workers in an industry or enterprise a real financial interest in the capital of that enterprise and give them an active participation in the benefits of increased prosperity.

Mr. John Rankin: And control.

Captain Soames: There are so many different ways in which it can be brought about. By profit sharing and co-partner-ship, I mean workers owning ordinary equity shares, with the full power an equity share brings with it.
As to control, we had an interesting maiden speech from the hon. Member for East Ham, South (Mr. Oram). He thought that the Co-operative form of profit sharing was the only one worth having. That form is very good, it has its part to play, but it is not the only one. He said that the workers in I.C.I.—which firm he quoted—do not think anything of this scheme because it would be so long before its 75,000 workers could gain management and control of that enterprise.
I do not suggest that the workers' share should be such that capital and management are to have no say in the control of an industry, but I do say that the workers should have a proportionate share. I think that our industrial life would be happier and better if a proportionate share of any particular enterprise were held by the workers in it.

Mr. Jack Jones: Would the hon. and gallant Gentleman explain to me, a steel worker, why an industry which was at one time—under nationalisation—paying shareholders only 70s. on every £100 of profit made is now called upon to pay them 150s. at least on every £100 of profit made? Does he think he could convince the steel workers that the Government really mean what they say when the present profit is being paid out to remote shareholders who do nothing at all to produce it?

Captain Soames: I say that those workers should be some of the shareholders. Too many people for too long have been preaching the theme that what is good for capital must automatically be bad for labour. That has served only to engender bad relations and to weaken the power of industry. Industry today has its work cut out to cope with foreign competitors without dissipating its energies on internal squabbles. The more widely it is realised that capital, management and labour are interdependent the one upon the other, and that they will rise or fall together, the better it will be both for industry and the country as a whole.
I am convinced that one way, and that a most important one, in which we can break down a lot of prejudice within industry and bring about that measure of understanding which hon. Members on both sides would like to see within industry, is by so contriving our affairs that the workers in any particular firm have an interest in its capital. Nothing would do more to increase confidence and to reduce industrial unrest, while, at the same time, enabling the benefits of an increasing prosperity to be more widely distributed.
There is a good deal of loose thinking about profit sharing. It does not mean either pensions schemes or bonus payments. Pensions schemes exist to provide for old age and to give peace of mind. Bonus payments are meant to act as an incentive for increased production. On the other hand, profit sharing is a means of sharing the benefit of increased production and prosperity and of bringing about better co-operation within industry. I do not expect that its introduction would have any immediate effect upon production. I agree with the right hon. Gentleman the Member for Ipswich that bonus schemes are better from the production point of view than profits distributed at the end of the year. Dividends paid on shares held by workers are too remote in point of time to be related to the workers' efforts on a day-to-day or week-to-week basis.
I do not regard profit sharing, in it, fullest sense, as being a method of increasing production immediately. Its benefits are long-term benefits consequent upon better industrial relations, for instance, and a better understanding between the three sides of industry which

I have mentioned. These schemes cannot be any substitute for bonus payments or pensions schemes. They are, as I remember my hon. Friend the Parliamentary Secretary to the Ministry of Labour saying in a debate in January of last year, the coping stone placed on top of bonus payments and pensions schemes. They fill a different need and cannot in any way be regarded as substitutes for those other forms of payment.
It is encouraging to note that more and more firms are introducing such schemes to give the workers a share in their capital. A number of large schemes have been recently brought in—Rugby Cement, I.C.I. and Rolls-Royce are three examples, and there are a number of smaller ones about which we have not heard. That is only a very small beginning. It is nothing as yet—it is nowhere near enough.
What I think interests us in this House is what part the Government can play to encourage more firms to introduce similar schemes. I do not believe that profit sharing is a suitable subject for legislation; there are so many different ways of handling it and each scheme will differ, and is bound to differ, not only from industry to industry but from firm to firm. That does not mean that there are not many ways in which the Government can help, and I should like to make three suggestions to the Financial Secretary who will, perhaps, be so good as to take them up.
Before the war, the Ministry of Labour used to collect and publish information on profit-sharing schemes. When the war broke out that service stopped and has never been started again. It would be a very good thing if it were restarted and firms could have access to that information. Secondly, the National Joint Advisory Council should be ready to assist and to offer advice to firms who are ready and willing to promote such schemes.
Thirdly, there are various taxation problems about these schemes. I do not want to delve into the intricacies of them this evening, but one particular problem is that it is more advantageous from a taxation point of view to a firm which wishes to distribute at the end of its financial year some profits to its workers to distribute them in the form of cash rather than in the form of equity


shares. I hope that the Treasury will examine that point with a view to seeing whether it would be possible to facilitate firms handing over, in the form of bonuses, equity shares if they would prefer to do that and if the workers are prepared to take them, rather than in cash at the end of the year.

The Financial Secretary to the Treasury (Mr. Henry Brooke): Perhaps I should say that the administrative difficulties in the way of such schemes are considerably less than some journalists seem to think. My right hon. Friend the Chancellor of the Exchequer said this afternoon that the Board of Inland Revenue would be ready to discuss with any firm any problems which arose out of a projected scheme.

Captain Soames: I am grateful to my right hon. Friend, and I hope study will be given to that point.
I have mentioned three ways in which I think the Government could help. The important thing is that the will and the intention to encourage these schemes should exist. Once that is established, all sorts of ways of assisting the promotion of these schemes can be found. I earnestly hope that the references which have been made by the Prime Minister and the Chancellor of the Exchequer during this debate will be the prelude to a great deal of thought and debate upon this matter.
Incidentally, I hope that this subject was among those discussed when representatives of the T.U.C. General Council visited my right hon. Friend the Prime Minister at No. 10, Downing Street yesterday to discuss ways of improving industrial relations. I think that this sort of scheme will go a long way towards improving industrial relations.
It will also be interesting, as time goes on, to see what is the attitude of the Opposition towards these schemes. We heard from the right hon. Member for Leeds, South (Mr. Gaitskell) that profit sharing, though quite a nice thing to talk about, was no answer to the problems of industrial relations and the redistribution of wealth. If the Opposition really believe in the creation of new wealth and its wider distribution, they will give their support to these schemes of profit sharing

and co-partnership. On the other hand, if by the expression "the redistribution of wealth" all they mean is the destruction of existing wealth and of private capital, they will certainly not be keen on seeing an ever-larger number of working people in this land becoming capitalists themselves. That is what we on this side of the House would like to see.
I welcome the references that have been made to this matter in the Gracious Speech. I hope the Government will adhere to these principles with patience and determination. As for the Opposition, they have got to be more constructive and more original than they have shown themselves to be in this Amendment today if they expect to be taken seriously either in this House or outside it.

7.24 p.m.

Mr. George Darling: I am very glad that I have the opportunity of following the hon. and gallant Member for Bedford (Captain Soames), because I want to talk about the same subject. I think that the most telling remark that he made was that there is a lot of loose talking about profit sharing and co-partnership. It would be very difficult indeed for anyone to talk more loosely about this subject than the hon. and gallant Gentleman has done.
First, we have to define what we mean by profit sharing and by co-partnership. We must understand what the schemes mean and how they can be put into operation. All the hopes, aspirations and expectations of the hon. and gallant Gentleman, the Chancellor of the Exchequer, and the Prime Minister do not amount to a row of beans; they do not mean anything unless the Government are prepared to face the problems to which their suggestions give rise.
To begin with, assuming that we agree with the proposals—I shall return to whether we agree or not in a few moments—and that we agree that schemes of this kind, when we have properly defined them, ought to be encouraged, we must remember that in all the speeches to which we have listened there have been no sanctions suggested, no compulsion or inducement upon anybody in industry to introduce


these schemes, except for a vague reference to some form of taxation arrangement. If the schemes and the results are as good as has been suggested in the speeches we have heard, obviously co-partnership and profit sharing should be introduced at once in every firm in this country. But nobody on the Government side suggests any sort of compulsion to bring about these schemes.
All we have had in this debate on this subject are grand speeches about industrial peace and economic progress, and the beginning of an idea that a dispossessed proletariat can be a danger to the well-being of the community; and that it might be advisable that this dispossessed proletariat should have something given to it. If all we are going to have are grand speeches about industrial peace, we shall achieve nothing. Unless we have concrete proposals, the whole matter will sound extremely "phoney."
We can well understand why the Chancellor of the Exchequer shies away from suggesting that industries ought to be compelled to do something in this matter because, as he has said, he is opposed to compelling industry to do anything, even to breaking up their price rings. He wants industry to carry on without interference, in the hope that it will confer benefits on the community. He will have to face a lot of problems if he is content merely to make grand speeches about co-partnership and industrial peace.
There is nothing new in the idea of co-partnership and profit sharing. The hon. and gallant Member for Bedford seems to think there is. We have had co-partnership in British industry for over a hundred years in the Co-operative movement. The experimental period came to an end a long time ago. We do not want any more experiments. We know how to do it. But if we are going to boggle at the idea of compelling companies to introduce co-parnership schemes, we shall not make any further progress.
Let me come to the question of definition. So far, the words have been used very loosely. Most hon. Members who have spoken on the subject seem to be under the impression that profit sharing and co-partnership mean the same thing. Of course, they do not. It is possible to have profit sharing without co-partnership, as is the case of I.C.I. and

the other firms that have recently, perhaps under the threat of nationalisation, decided to adopt it. It is also possible to have co-partnership without profit sharing, although we in the Co-operative movement think it is desirable that the two things should go together. It is possible to have "phoney" profit-sharing schemes in which employers try to sidetrack the legitimate wage demands of their workers with promises of something out of the profits at the end of the year, thereby doing something which, I am sure, the whole of the House would condemn.
We have to make sure, if we are talking seriously about co-partnership, that we apply it properly in industry. It means taking the workers into partnership. In other words, it means opening the books to the workers and giving them full information about what is going on. It means giving them a share in the management. It means having workers' representatives in the board room; and if the Government cannot stomach that idea, then I suggest that the Chancellor and his right hon. and hon. Friends ought to drop all their talk about co-partnership, because this is what co-partnership means.
If all the Government want to talk about is profit sharing, and if they are not prepared to give the workers a share in the management of industry, we must have definitions of what they mean by profit sharing. Obviously, the Government must not give their approval, nor must anyone else, to profit-sharing schemes in a company which does not pay trade union rates of wages, because those profit-sharing schemes may have been introduced to avoid having to pay trade union rates.
This raises the whole question of trade union representation, wage cutting, and so on. Trade union recognition must be a condition of all profit-sharing schemes in order that the "phoney" nature of some of the schemes can be exposed and so that we can see which are and which are not genuine profit-sharing schemes, if the idea is to go ahead. After all, profit sharing surely means what it says —sharing the profits; and if the worker is to have a rightful share of the profits, we must somehow define what is the minimum share of the profits which


should go into the pockets of the workers.
In spite of all the tributes which have been paid to I.C.I., the I.C.I. scheme must be criticised because it is completely inadequate. Nobody can suggest that to give a half of 1 per cent. of the annual profits to the workers is profit sharing. Because is a big institution and, even with that small share, can give their workers about £10 a year each, it sounds fine, but that is a bonus on wages and is not a real share of the profits.
I do not want to go into detail, even though this is the only point which I shall make in a short speech, for I know that other hon. Members want to speak. I suggest that we must define what we mean by profit sharing before we go further in this matter and we must stop much of the loose talk which has been going on. There must be some test of adequacy, with some acceptable minimum proportion of the profits going into the pockets of the workers, before any approval should be given to a so-called profits-sharing scheme.
The hon. and gallant Member for Bedford said that we have to do a lot of thinking about these problems. In fact, we have been thinking about them for a long time, and one of these days he will get round to reading the publications which have resulted from our thinking. My next remark may sound immodest, and I am sorry about the juxtaposition, but a year or so ago I wrote an article in the "News Chronicle," suggesting, if the Tory Government want co-partnership, how it should be organised and how it should be encouraged.
I was interested to note that the hon. Member for Orkney and Shetland (Mr. Grimond) picked up the main point in an article which he wrote during the General Election. He stole the idea, but I do not mind my ideas being stolen in that way. I merely think that it was a mistake to call the article, "Only the Liberals Face Facts." Nevertheless, I am glad to have his support, and, I hope, that of the Liberal Party, for the idea that if we are to go ahead with these schemes the Chancellor should give tax relief to companies which operate acceptable co-partnership schemes—and I say co-partnership and not profit sharing.
We know how to do it from our experience in the Co-operative movement.

As my hon. Friend the Member for East Ham, South (Mr. Oram) said, the pattern is that of the co-operative productive society which, very simply, is this: a company agrees to pay to its shareholders, to begin with, a fixed rate of interest, say 4 per cent. or 5 per cent., and, after all the charges for depreciation, reserves and so on have been met, the extra profits above that are divided two or three ways, although not in equal parts. The size of the parts would depend on the circumstances. There is a part for the workers, a part for the shareholders and a part to help the customers by means of lower prices or better services.
This is done directly out of profits, but it carries with it the condition that the workers are part of the partnership, that they sit in the management. that they are in the board rooms, that as a result of these schemes they have direct representation on the board of directors, that they have a part to play in deciding how the profits shall be distributed, and that they have the right to take their share of the profits either in cash or in additions to their shareholding, whichever they prefer. They are not forced to take shares, as has been the case with the I.C.I. The I.C.I. scheme, in my view, cannot be defended, because it does not give the workers freedom of choice in the bonus which is rightfully due to them out of the profits of the industry.
While, on this occasion, we are not opposing the idea of co-partnership, we insist that there shall be proper definitions of what we mean. If the idea is good and acceptable within our definitions, then we urge the Chancellor to consider very carefully giving tax relief to those firms which adopt straightforward, honest and fair co-partnership schemes.

7.38 p.m.

Mr. R. Brooman-White: I am extremely glad to have the opportunity of following the speech of the hon. Member for Hillsborough (Mr. G. Darling), because I wish to detain the House, although for only a few moments, exactly on that theme. It is a subject in which I have interested myself for a long time. I have referred to it in a series of Election addresses, both in those with which I succeeded in getting elected and in those with which I did not succeed in


getting elected, so that I can claim to be reasonably objective about the party political impact of these ideas.
I am very glad to see the amount of interest which has been aroused in the subject in the House and the amount of discussion which we have had today. During the last Parliament my concern was that these matters were not discussed enough. I am now becoming a little worried that they may be discussed too much and that an unnecessary atmosphere of controversy may grow up in a field where there is considerable common ground between both sides of the House, because in certain circumstances that controversy might impede progress.
In my approach to this idea, I do not share all the enthusiasm expressed by some of my hon. Friends, nor do I share all the scepticism expressed, and in some cases unexpressed, which I sense in certain quarters on the other side of the House. Does the hon. Member for Tradeston wish to interrupt?

Mr. Rankin: My division is not Tradeston. I will bring the hon. Member up to date; it is Govan.

Mr. Brooman-White: Whatever the label now attached to the area which the hon. Member represents, I am sure that he will represent it as enthusiastically and vociferously as he represented Tradeston in the past.
I think hon. Members on both sides will feel that in the pursuit of these ideas over the last months, and indeed years, the initiative has been not a political initiative but an industrial initiative. There has been a considerable and substantial increase in various types of profit-sharing and co-partnership schemes, but it has come not so much in response to any exhortation or guidance from this House as in the form of a spontaneous growth through far-sighted and enlightened feeling in industry. Industry has been making the running and we in the main have been applauding their efforts. I hope that henceforth we shall be able to do more to encourage industry in the type of action that it has been taking.
I agree with the hon. Member for Hillsborough that it is a wide subject with a very long history about which, in political thought and in popular discussion, there has been considerable confusion in

terminology. It is important that we should be a little more precise, particularly in debate in this House, about what we mean. If these schemes are to expand, as I hope they will, and we take increasing interest in the methods and scope of that expansion, there is a danger that if we are vague in our terminology concerning them, we may find ourselves quarrelling unnecessarily because we have not been quite clear in defining exactly what we were talking about.
There are three broad aspects of this matter. There is profit-sharing in the form of the actual share out on profits at the end of a year. That has been done by a number of firms for a long time, and it will continue to be done. But I agree with those hon. Members who said that it may be diminishing in importance because rather more emphasis is being placed on production bonuses which come forward more quickly—at the end of the week—and are a greater and more direct incentive to output. Nevertheless, no one can object to schemes which aim at giving the workers a share in the profits at the end of the year, if it comes as a supplement to the other payments.
There is another question which has been bracketed with this idea of industrial democracy. I prefer the phrase "industrial democracy" to the phrase "a property-owning democracy," because I think it conveys more exactly the idea we want to express.
It is the question of joint consultation. That is common ground. The more information that can be given to all participants on a job, the better is the job likely to be done. I think there will be very little difference of opinion about that. It is accepted in practice in almost all the best firms, and the development of the practice is steadily expanding.
There is also the question—and this is a subject on which I think most of the discussion today has centred—of employee shareholdings. Incidentally, the hon. Member for Hillsborough was not right in his statement that the I.C.I. introduced the recent scheme under threat of nationalisation. I think I am correct in saying that the I.C.I. has operated a scheme to encourage employee shareholdings for a very long time, long before the question of the nationalisation of chemicals was raised—the latest development is


only an expansion and extension of their previous concepts.
Rolls Royce has also been in the news quite recently. That firm, too, has had a scheme operating for years. It was a scheme suitable to the circumstances when Rolls-Royce had only a couple of thousand employees. It has now been extended and developed in a form suitable to new conditions in a flourishing firm that has between 30,000 to 40,000 employees.
I believe that one practical consideration which has lead to this surge forward in the field of employee shareholding—and this is a point very germane to the general theme of this debate—is the question of the availability of capital and the tapping of further capital resources. Some enlightened firms, looking ahead, realise that as wages increase and wealth spreads more and more throughout the community, there is an increasing need to encourage savings in every way possible and to attract the capital investment of these savings directly into industry. If employees, with increasing wage packets, are to be encouraged to save and to plough back their money into industry—and it is a good thing that they should be so encouraged up to a certain point, although of course there are dangers in going too far and putting too many eggs in one basket—it is desirable that up to a reasonable point they should invest in the industry in which they are employed and whose circumstances they know very well for themselves. If they put their savings in the Post Office or elsewhere they filter back, of course, into industrial investment. But direct share-holding by employees for at least a proportion of their savings has obvious merits.
I do not want to detain the House with any long digression about the philosophy underlying this, but I think that there is common ground by hon. Members on both sides that what we are groping for to a large extent is to find ways and means of adding interest, responsibility and status to the employee in industry. We simply cannot keep to the old pattern. The job of the unions is not limited now only to getting better working conditions and higher wages. There is more to it than that. Large-scale modern industry has removed much of the scope given in earlier days to individual craftsmanship. Modern unions

cannot provide the same pride and esprit de corps as the old guilds. That is nobody's fault. It is due to changing circumstances. But men's character and aspirations have not changed. The day of the little individual working on his own behalf is largely past. In the big industrial structure of this modern age we have to find new ways and outlets of satisfying the sense of individual pride and ownership that had direct satisfaction in other ways in the past. These things are intangible, but they are very important.
The main point, however, that I want to make is on the specific question of what sort of rôle these problems are likely to play in our party political discussions in the immediate future, and also the part they are to play in the field of Government action. On the political side, I will not say very much about the Liberal Party. It has the privilege of small minorities of being able to take the extreme position and say, "We need legislation on that." That is a position peculiar to that party which is not shared by hon. Members of the Labour Opposition or of the Government. But between the position of the Government and that of the Opposition there is much ground in common on these questions. There is also ground for controversy as to the extent to which it is desirable or otherwise to extend employee share-holding in those industries where nationalisation is still the subject of political dispute.
Let me come to the question of steel. The hon. Member for Rotherham (Mr. Jack Jones) asked what was being done. He will remember that during the debate on the Steel Bill he had a certain exchange of views on this. I was advocating at that time that the Steel Board should have a statutory responsibility to encourage employee share-holding schemes. The hon. Member for Rotherham disagreed with that, and I felt the full impact of that disagreement. Hon. Members who have disagreed with him will know the vigour of his arguments; the sensation of being exposed to them is rather similar to that of being bucked off a horse. He is emphatic in the expression of his views and he did not like the idea of employee share-holding in the steel industry.
I was in favour of it, and I still am. I am glad to say that a certain amount has been done. In my own constituency,


Colvilles have introduced a successful scheme. It is still in the initial stages, but it is going well. I hope that the hon. Member for Rotherham will agree, without prejudice to his long-term political principles, that in present circumstances employee share-holding is of benefit to the steel industry.

Mr. Jack Jones: What has been done prior to nationalisation? There has been an awful lot done by the industry itself since it was nationalised. These were things that ought to have been done 40 or 50 years ago. Why were they not done?

Mr. Brooman-White: I am concerned with what has happened now, not what happened in the past. There has been a successful scheme introduced by Colvilles, and I hope that further successful schemes will be introduced by other firms.

Mr. Rankin: Can the hon. Gentleman tell us how many workers in Colvilles have taken shares in the scheme?

Mr. Brooman-White: I have not the latest figures, but it is about 1,000 out of some 17,000 employees. It is a new idea in the steel industry, and I think that represents a good start. From inquiries I have made, I find that those workers who have taken up the offer are scattered very widely through the various grades of people employed in the industry.
Where, however, I differ from some of my hon. Friends is that I believe they expect too much too quickly, whereas I believe that this is not something which we can rush.

Mr. Sydney Silverman: That is something new in the views of the Tory Party.

Mr. Brooman-White: We have occasionally attempted too much, but we have managed, on the whole, to take two steps forward and one step backward rather than the reverse, as was the case with hon. Gentlemen opposite. We are making progress.

Mr. Silverman: The hon. Member is quite right in describing the process of two steps forward and one step backward. But he ought to remember that the two

steps forward were taken by the Labour Government between 1945 and 1950, whereas the steps backward have been taken since then.

Mr. Brooman-White: I do not want to be controversial, but hon. Members opposite have taken two industries out of their nationalisation programme for every one they have put back. They seem to be moving away from nationalisation, and that is something I am glad to see.
If I may, I should like to return to the points I wanted to make. Visitors from overseas who come to this Chamber are always struck by the speed with which we can pass from controversy to constructive proposals, and I hope that that will apply in this matter of co-partnership. There is room for disagreement over industries where there may be argument about nationalisation. There may be room for a difference in emphasis in these spheres where, I believe, certain sections of Socialist opinion are turning to the idea of fairly extensive Government shareholding short of nationalisation. But there remains by far the major field where I hope that all sections of this House, the trade union movement and the other people concerned will feel that the extension of employee shareholding in industry is of benefit to everybody. I hope no arguments will be advanced here which will impair any constructive suggestions on profit sharing schemes and that we will all strive to see them develop rapidly.

Mr. Jack Jones: Would the hon. Gentleman tell the House and me in particular how it is that he is now advocating that employees should have shareholding in particular industries while he went into the Lobby against a scheme for the people of this country to be shareholders in the steel industry?

Mr. Brooman-White: The hon. Gentleman knows the answer to his question perfectly well. I do not want to go into the controversial subject of profit sharing versus nationalisation. We can argue that on another occasion. But all industry is not going to be nationalised, and I should like at least to see general agreement on the subject of the extension of co-partner-ship in that section of industry which is not open to such dispute.
I should now like to turn, if I may, to the positive action taken by the Government. My hon. and gallant Friend the


Member for Bedford (Captain Soames) has put forward certain proposals, and hon. Members on the other side of the House, speaking for the Co-operative movement, have suggested that the Government should go much further than I am prepared to go. They have told us that this thing cannot be really effective unless employees have representation on hoards of directors. I am not necessarily in favour of that, for in many industries it may not be suitable or we may not be ready for it. Nor do I know what the views of the trade unions will be about such proposals in certain industries. That is one of the things which will have to be worked out. The Germans have gone much further than we have in this direction. I certainly have nothing in principle against that idea.
But on the main and immediate issues the Government can take a certain amount of positive action and as well can prevent negative influences making them-selves felt in certain directions. We certainly cannot complain that this Government have failed, during the last ten days, in rousing public interest in these schemes. The Government wish them to be advanced. But it is also necessary that their views on these matters should filter down through the administrative machine, should clear away certain administrative barriers that may still exist and impede such schemes to go forward.
Of course the Treasury is one of the principal Departments concerned. I was pleased to hear the Chancellor say that consideration will be given to problems of taxation in connection with these schemes. I hope that guidance will also be given to the Capital Issues Committee. There is one case which I have mentioned before in this House, namely, that of the Royal Bank of Scotland, where an employee shareholding proposal was turned down by the Capital Issues Committee, I never found out on what grounds. That sort of thing should not be allowed to recur.
The Law Officers of the Crown will also have to consider carefully various rather intricate and tangled points which I, personally, am in no way qualified to discuss. I believe there are certain old laws which were drafted to meet entirely different circumstances, such as certain Sections of the Truck Act, but which now are in one or two cases already impeding

the realisation of desirable employee shareholding schemes. Legal opinion must be given on whether amendment is necessary.
Finally, the Ministry of Labour has a great part to play in these fields. The Ministry has been very active in these latter days, and in present circumstances one hesitates to suggest that it should take anything but a well-earned rest. It has certainly earned it, but I hope my right hon. and learned Friend the Parliamentary Secretary, who has done much work in this matter, and my right hon. Friend the Minister will take any steps that they can to get these questions raised again and reconsidered by the Joint Industrial Council or any other machinery at their disposal so that the Government, the trade unions, the employers and others will come together to see what can further be done to advance these ideas.
I hope that there will continue to be a general advance in this whole concept of industrial democracy, and that little by little we shall make headway in this field and thereby show to other nations the same sort of leadership in political thought and industrial welfare as we have given in the past in so many other great spheres of progress and development.

7.57 p.m.

Mr. Thomas Hubbard: One might well be excused for thinking that this debate was not concerned with the Gracious Speech or with the greatest difficulty we have ever faced in this country, but only whether we should have co-partnership or profit-sharing schemes, or something of that description. I believe that in these difficult times we ought to devote some part of the debate to the question of profit making before we talk about profit sharing. That is what should be uppermost in our minds at the moment.
A great deal has been said about productivity. I imagine that if everybody were concerned with the question of increased productivity and those who seem to lecture to people in industry about profit sharing and co-partnership would take a share in productivity, we would make more progress with one of the most difficult problems which we are up against —those who put nothing at all into the pool and take too much out of it. That is something which this country should


not stand any longer; it is one of the things we have to overcome.
Looking back over the years since the end of the war, I would say that this country ought to be well ahead of some of the economic difficulties which are facing us now. If some of the enormous profits which are now taken out of private industry were ploughed back and used for the purchase of modern machinery which would increase productivity, we would be in a much better economic position. If we could only control the profits taken out of industry so that more could be ploughed back to increase production many of our economic problems would be solved.
Even the Government have admitted that the only industries that have been ploughing money back, which have been modernising their plant and making preparations for the future, are the very industries which hon. Members opposite, and particularly the hon. and gallant Gentleman the Member for Bedford (Captain Soames), have been criticising, namely, some of the nationalised industries, including the coal industry. If anyone goes to the coast of Fife today they will see in the Firth of Forth a manmade island. We are making inroads into our coal requirements, and unless we are able to overcome that problem, no matter what may be said about profit sharing and co-partnership, there will be no profits to share. Nineteen out of twenty industries in the country have been dependent upon coal, and when the coal industry was nationalised it was running at a dead loss. Nobody on the other side of the House ever suggests that it should be denationalised.
It must be remembered that coal is practically the only mineral raw material that we have in any worthwhile quantity. Goodness knows what would have happened to the country had the coal industry not been nationalised. Work on the island in the Firth of Forth has been done to prove the coal measures under the basin of the Forth, and a tremendous amount of money is being spent to ensure that we get the coal that we need. I often wonder why private enterprise so neglected the industry as to leave the country unable to face up to its economic difficulties after the war.
It is easy for hon. Members opposite to claim what a wonderful job the Tory Government have done. They have made great play about prosperity and the number of houses they have built. If we were more realistic, we would accept that no Government builds houses. I admit, of course, that a similar claim was made by the Labour Government. It is the local authorities who have the job of building houses and who arrange for the builders to build them. It is the local authorities who pay for them, and when we come down to the question of profits we must take that into consideration.
Not only must we get productivity, but we must get it at a price at which we can sell our goods overseas; and, as far as we know, those markets might become extremely difficult in the near future. if the top-level talks are a success, a great deal of the time and money that has been devoted to defence will be redundant; and if those talks are not a success then, obviously, that production for war purposes takes us nowhere. We still remain dependent upon our raw materials. We must, therefore, think realistically.
What is the effect of the Government's housing policy, taken in conjunction with their monetary policy? It is all very well for the Chancellor of the Exchequer to increase the Bank Rate, which his Government have done twice, to curb expenditure on the home market and, at the same time, to tell local authorities that they must build more houses, but the immediate effect of that is to increase the cost of productivity.
Every time that the Bank Rate goes up, the Public Works Loan Board rate of interest to local authorities goes up. It went up again in February. For all we know, and despite what the Chancellor has said to the contrary, there may be another increase in the Bank Rate this year; yet local authorities are asked to build more houses. They have built a tremendous number in recent years at ever-increasing cost.
Let me quote as an illustration my constituency of 50,000 people. The housing debt which has accrued in Kirkcaldy is £4½ million. The rate product is £450,000 a year. Two years ago, in 1953, the capital debt for housing was £4 million, and this year the capital debt for housing alone will be £6 million. This


means, in effect, that our grandchildren will be paying for the houses which the Tory Government claim to be building.
The obvious result of all this is that rents have risen to their highest-ever figure. Rates, an important item in Scotland, have reached their highest figure in history. The immediate effect of this is that workers demand increased wages so that they can pay the rents for their houses. Rents have been artificially boosted because of increases in the Bank Rate and in the Public Works Loan Board interest rate. That is no way out of our difficulties, but it seems to be the only way in which the Tory Government have set about this problem.
The cuts in the food subsidies and the increases in the Bank Rate force the ordinary workers who do not enjoy profit sharing to demand increases in wages. If miners demand and get increased money, the cost of coal rises, and similarly with transport and the manufacture of goods. Although we have had tremendous increases in productivity since the war, there has been this rapid upward spiral and, because of the action of the Tory Government, we have failed to derive the advantage.
I say seriously to the Government that we are shareholders, that we on this side of the House have just as big a stake in the country as anyone on the other side. The worker in industry has just as big a stake in the country as the managing director of his firm. If an economic crash should come, not only the bosses, but the workers themselves, will suffer. If we are to look forward with any hope to the solving of our economic crisis, we must get down to clear thinking on both sides of the House.
Nobody wishes to dwell on his experiences in pre-war years, but the memory of them remains. The country suffered tremendous difficulties during that time. There have always been economic crises —at any rate, I remember them since the days when I was at school. I do not suggest that we will ever go back to that same kind of life, but we must move very cautiously to ensure that those days do not return.
There must be some limitation of the issuing of bonus shares. These things must not only be just, but they must

appear to be just. The Government cannot convince the lower wage earners that they must make greater effort when, every year, they read of £100 worth of shares being increased to £200 and of the payment of 40 per cent. dividends. That does not contribute to productivity. If this sort of thing continues and we run into difficulties, either because the top level talks are a success or because they are not a success, we must be careful that we do not have a conflict between industry and parliamentary government. That would bring chaos to the country, it would bring down the Government in a month, and it is something that we must avoid. The only way to avoid it is to make it quite clear that we are all shareholders with a stake in the country.
It is no use reading the Unilever figures and then hear the hon. Member for Aberdeenshire, East (Sir R. Boothby) say that he still supports monopolies. That kind of argument carries no weight whatever. If we are to go forward and conquer our difficulties—the difficulty, indeed, that brought about the Election —we must get away from the merely academic question of whether at some time in the distant future we are to have co-partnership or profit sharing. We have co-partnership and a stake in the country now, and the Government and the Chancellor of the Exchequer must recognise this. The right hon. Gentleman today told us nothing of how we are to overcome these difficulties, but made a few abstract statements. If he wants a bigger increase in production, he must ensure that everybody makes a contribution to the pool. Far too many people still go about without making any contribution whatever.
It must be a matter of real regret to most people that in these difficult times, with the dangers of inflation facing us and with all the talk of co-partnership and profit sharing, the old-age pensioners, who really built the great industry of this country, are suffering so severely. Will the Government take them into co-partnership, and give them a share? Will they give the people who really run industry a share in the profits? Perhaps we shall when we get a Government which is prepared to do that, which is capable of clear thinking, and will recognise that, although there may be different views by opposite political parties, at the end of the day we all have to face the common


task of being fair to all, which is the only way in which we can hope to solve these awful difficulties.

8.10 p.m.

Mr. A. C. M. Spearman: I should like to say something about the speech of the hon. Member for Kirkcaldy Burghs (Mr. Hubbard) later, but, first, I should like to refer to the speech of the right hon. Gentleman the Member for Leeds, South (Mr. Gaitskell), who opened the debate. However poor his material may be, the right hon. Gentleman always makes a very fine Parliamentary speech, and that today certainly was no exception.
The right hon. Gentleman complained about the great rise in recent weeks in the prices of ordinary shares, but he did not add that that rise was due, to a considerable extent, to buying from America, where, rightly or wrongly, there is a far greater confidence in the future of industry in this country than there was before 26th May. [HON. MEMBERS: "0h."] I think it must be a good thing that the United States should have this confidence in the industrial development of this country, and that it should send its money here.
The right hon. Gentleman also made great play about the rise in dividends, and a lot has been said today about profit sharing. I certainly welcome some means by which the workers might share in any rise in dividends, and I always thought that those schemes in operation by the gas companies before nationalisation were excellent ones. But I see no reason why a Conservative Government should hang their heads in shame because of a rise in dividends.
Let us look at the facts. The amount that is paid extra in dividends is a very small fraction indeed of the total amount that is paid in wages and salaries, and, therefore, can have no material direct inflationary effect. To a considerable extent, the shares are owned by people with very small capital and by institutions, and, in so far as they are held by that class of investor, I really wonder whether anyone in any part of the House can grudge them an increase in dividends.

Mr. Donald Chapman: Does the hon. Gentleman not know that a quite impartial estimate of

the number of shareholders puts the figure at only 1¼ million of the total population as owning any shares at all? How can he say that it is widely spread when it relates only to 1¼ million of the total population?

Mr. Spearman: I said, and I think that the hon. Member will find that it is the case, that the institutions which I am talking about—the insurance companies—benefit a number of workers. The right hon. Gentleman who opened the debate said that the amount which these institutions held in ordinary shares was only a small proportion of their assets. In making that calculation, I suppose he was taking into account the purchase price paid many years ago, and not the value today, when the right hon. Gentleman will find the amount to be a very considerable proportion of the assets of the institution.
In so far as these dividends go to the very rich, we must remember the very large amount which is taken in taxation. A very rich man whose income is increased by £1,000 a year from dividends finds that £900 goes in taxation and that he receives £100. If dividends go down when times are bad and do not go up when times are good, funds will not be available for risk capital, which, I think. would be most unfortunate.
No matter where we sit in this House, we can all agree today that the prime job of the Chancellor of the Exchequer is to achieve a balance between money income and the real national income. We may disagree on how that balance is to be achieved, but we must have that balance, because if there is too little purchasing power, we get unemployment and all that follows with it, and if we have too much purchasing power, we get inflation which, allowed to go too far, is the most unjust form of taxation, and, if unaccompanied by an equivalent amount of inflation in competitor countries would result in a disastrous balance of payments crisis.
To his credit, my right hon. Friend the Chancellor has not only achieved an approximate balance, but he has done it at a very high level of activity. The demands for goods and the supply of resources are, as it were, the two legs of the economy of the country, and they must be equal. It is an easier job to cut down demand than to increase resources,


but, as I know to my own personal cost, cutting down a long leg is a very painful process. It is far pleasanter, but it requires greater skill and courage to lengthen the short leg; that is what the Chancellor has succeeded in doing.
Has anyone ever watched a child learning to ride a bicycle, sometimes leaning too much one way and sometimes too much the other way, with a constant danger of falling off? Of those of us who have watched the Chancellor in the last few years, some have thought that he leaned too much towards the danger of inflation, while some others have thought that he went too much the other way, but we now see that he has, in fact, ridden a most extraordinarily dexterous and stable course between the two.
To return to the arguments of the right hon. Member for Leeds, South, I thought that the action of my right hon. Friend in taking firmer measures of a monetary nature in February were exceptionally well timed. I do not believe that making money dearer has anything like the unfavourable effect on investment which has been suggested from the other side of the House. I think that the main effect of dearer money on investment has been to discourage those marginal enterprises like luxury enterprises and those things which are not really in the national interest.

Mr. Frederick Peart: Mr. Frederick Peart (Workington) rose—

Mr. Spearman: I am sure that the hon. Member is about to say, "What about agriculture?" Perhaps he will bear in mind that the Minister of Agriculture has said that he does not think that the present cost of borrowing is having any seriously adverse effect on agriculture. At present, it is right that the Chancellor should pay more attention to making money scarcer rather than dearer, and in that way bring down the bank advances.
The right hon. Member for Leeds, South also spoke about the bank advances, but he did not point out, until I interrupted him, that there has been an enormous reduction in bank investments. Now that these investments have been realised, obviously, the next step is that the bank advances are affected. Those who advocate the monetary weapon have

never, so far as I know, said that it is a weapon with immediate effect. It is like very good medicine; it takes time to work, and it is now working, as I believe, most satisfactorily. I hope it is the Chancellor's intention to check these bank balances by the complicated open market operation of which the authorities have shown themselves to be such masters in recent years.
I should, with all diffidence, like to make one concrete suggestion to the Chancellor, and that is that he should encourage the public utility companies to borrow in the open market rather than borrow from the banks, because by doing that he will clearly reduce the amount of bank deposits and that will have an immediate effect on bank advances.
I want now to advocate two measures which, I know, will be unpopular. But what is the good of being an unimportant back-bench Member who speaks only for himself if he cannot say what he thinks is right, whether it is popular or not? Indeed, I have always found hon. Gentlemen opposite very indulgent to those who express views with which they disagree, provided they think they are expressed with sincerity and some knowledge. I want to talk about coal. I am not going to talk about the production of coal, because that is one of the many things I know very little about. I would say only that I am not entirely convinced that the present organisation for its production is as satisfactory as it ought to be.
This, however, I would say, with a good deal of confidence, that if we cannot produce more coal then we ought to raise the price Of coal—I think it is still lower here than on the Continent—in order to see that it is more economically used, because I just do not think we can go on burdening our balance of payments with this enormous expenditure on account of coal.
I come to the matter of houses, which was referred to by the hon. Member for Kirkcaldy Burghs. He said that Governments did not build houses. They create the conditions, however, in which they can be built, and I think it was the great achievement of the Government, in their first three and a half years, that to a much greater extent than their predecessors they replenished the ravages of war by seeing that such an enormous


number of houses were built. However, I do not think we can afford to continue to put such a large part of our resources to the building of houses, to that form of investment, if we are to increase our standard of living to the maximum that is possible.
I now come to the very controversial matter of rent control. I believe—I speak entirely for myself—that that is a problem which ought to be faced by a brave Government. It is inequitable that people with the same amount of income, having the same sort of house, are paying quite different rents, depending on an accident or their places in the queue. Not only is it inequitable between people in the same income group and living in the same class of house, but it is very unjust to the property owners that that section alone of the community should bear the full brunt of the fall in the value of money. As I know from my own constituency experience, property owners are by no means confined to the class of plutocrats. Many people with small savings buy houses, and they are dependent on those savings.
The present system of rent control is very wasteful in the use of houses. So long as the rent is much below the economic rent there is no chance, in my opinion, of getting the most economic use of houses, because there is no inducement to people who want a smaller house to move to a smaller house or to convert their house into more than one residence.
Next, I should like to say something about protection.

Mr. Chapman: What would the hon. Gentleman do about the rents?

Mr. Spearman: I have passed to the next point, so perhaps I may be allowed to continue.
The right hon. Gentleman the Member for Leeds, South has shown himself in the debate today, as he did in the last debate in which he spoke in this House, to be an advocate of import controls. As the "Manchester Guardian," I think it was, pointed out, it is the Socialist Party which has now become the protectionist party. I most sincerely implore the Government to resist the pressure to protect industries in this country from foreign competition.

Mr. Peart: And agriculture?

Mr. Spearman: I think it is most unfortunate—

Mr. Wilfred Fienburgh: And agriculture?

Mr. Spearman: Certainly. If agriculture is to be helped, as, I think, it should be helped, I should much prefer to help it by subsidy than by tariffs. First, because I do not think the consumer should bear the brunt. I would rather the taxpayer did. Secondly, our putting tariffs on agricultural goods coming to this country would invite retaliation. Three-quarters of our imports are raw materials, and three-quarters of our exports vital to pay for those imports are manufactured articles, and tariff retaliations against us would mean we could not sell our goods abroad.
What I was urging was that for the sake of the consumer, who has none of the organised power of the industrial pressure groups, there should not be protection of our own industries by tariffs against imported goods without a great measure of consideration. I want to make it plain that I am not opposing anti-dumping measures. Clearly, the permanent dislocation of an industry by imports of goods which could be only be imported temporarily would benefit no one in this country.
The point I want to make is this. We must get rid of the idea that because an industry was of a certain size at a previous time that is, therefore, its ideal size today; that what it is right to make now in the middle 'fifties will necessarily be the right sort of things to make in the middle 'sixties. We must not freeze the economy in obsolete directions. Our purpose must be not to maintain an industry in a particular form but to shift it in whatever direction is necessary in order to sell the most quantity abroad. Indeed, there must be continuous change, so that we make those things which the foreigner cannot make or cannot make as well as we can.
This non-protection of industry is, in my opinion—and I wonder whether hon. Members opposite will agree with me—not adverse in its effects upon the workers in those industries to any appreciable extent at a time of a very high level of employment, because all they suffer is the temporary inconvenience of moving to another job.

Mr. Chapman: Where are the jobs to come from?

Mr. Spearman: I would remind the hon. Gentleman that there are twice as many vacancies as there are people applying for jobs.

Mr. S. Silverman: I hesitate to interrupt the hon. Gentleman, but it may be possible that I shall follow him, and I do not wish to be unfair to him. Will he tell me how he would apply that doctrine to a constituency like mine, where the people live almost exclusively on cotton; where 65 per cent. of the registered workers are mill workers? How do they move to other industries?

Mr. Spearman: I believe—and I think that there is a good deal of evidence of it from what has happened in Lancashire in recent months—that workers are able to get other jobs. I agree that it is inconvenient to move from one job to another and that there may be a few weeks of unemployment, but that, I consider, a price well worth paying if it will increase the strength of the country's economy.
I quite agree that it is much harder on employers, because it is very much more difficult for them to shift when they have their money and organisation in one place. It is much more difficult for the employers to move their interests than it is for the workers to move. I think, however, that that is inevitable. I have not such a great sympathy with employers for that reason. I believe it to be the price they have to pay, because the compensation for employers who show sagacity in what they make and efficiency and enterprise in its production is a great reward, and those who fail must pay the price.
During the six years of Socialism—I have said this frequently—I thought that the Government were much too soft with the employers. They created conditions in which profits were easy to make. Having made profit-making so easy, they had to stick on huge taxes, which was very discouraging to workers and employers, to prevent inflation. I believe, and I have always held the view, that conditions should be such that profits are difficult to make, but worth while making; so that those succeed who show enterprise and energy and who are really competitive, and those who do not give way to other

people. I believe that it is only by using competition to the full that we shall expand the economy of this country so that we may continue to increase wages, improve social services and raise the standard of living.

8.32 p.m.

Mr. Sydney Silverman: The hon. Gentleman who has just spoken, who represents the highly industrialised constituency of—Scar-borough—

Mr. Spearman: And Whitby.

Mr. Silverman: Yes, and Whitby, has made a most remarkable speech. I do not think anyone in the House will quarrel—I shall not—with the courage and independence of it. I think that this House benefits from that kind of speech from time to time, even from the most eccentric of us.
The hon. Member for Scarborough and Whitby (Mr. Spearman) began his speech by comparing the course of the Chancellor over the last three years with the riding of a cycle—I think he was unkind enough to say a man learning to ride a cycle—

Mr. Fienburgh: He said a child.

Mr. Silverman: —sometimes leaning to one side and sometimes leaning to the other, but somehow or other managing to preserve a precarious balance throughout.

Mr. Spearman: I did not quite say that. I said that if one watches a child learning to ride a bicycle one sees that he sometimes seems to be leaning too much one way and sometimes the other. Some of us wrongly thought that the Chancellor was leaning one way or the other, but the facts have shown that he has kept a very steady course.

Mr. Silverman: I am more literal-minded than that. In my experience of these matters—though I have never ridden a bicycle—when I see either a child or an adult seeming to lean to one side, it is usually because he is leaning towards that side. The compliment of the hon. Member was that the Chancellor was maintaining—either through a real or only a seeming leaning this way and that —a precarious balance.
Having complimented the Chancellor on doing that, it was a little remarkable


that the hon. Gentleman should then proceed to recommend his right hon. Friend to do three things. One was to build less houses; the second was to raise the rents of rent-controlled houses, and the third, I think, was not to protect industry. As for the third, I may have something to say a little later on, but as to the first two, if the skilful rider of the bicycle is going to add those two burdens to all his other difficulties, then the sooner he equips himself with a tax-free crash helmet the better. It really is a most remarkable example of the comparison of a Tory post-Election speech with a Tory pre-Election speech. I very much doubt whether even in Scarborough the hon. Gentleman advocated taking the control off rent-controlled houses.

Mr. Spearman: I did, and I can give the hon. Gentleman particulars of the OFFICIAL REPORT in which is recorded what I said on the subject two or three years ago.

Mr. Silverman: While fully accepting what the hon. Gentleman is telling us, I can only say that his re-election for Scarborough was even more remarkable than I thought it was.
What we are dealing with is an Amendment which my right hon. Friend the Member for Leeds, South (Mr. Gaitskell) moved this afternoon in a characteristically devastating speech. It reads:
But humbly regret that the measures set forth in the Gracious Speech are not calculated to achieve full employment, stable prices, peace in industry and an adequate surplus in our overseas payments, or to bring about a more equitable distribution of wealth among Your Majesty's subjects.
I also ventured, with the support of three or four of my hon. Friends who come from the same part of the country, to put down an Amendment. I do not in the least complain that it was not called—I never thought that it would be —but it does, I think, fit in very well as one regional example of the national criticism which is involved in the Amendment moved this afternoon by my right hon. Friend. It says:
But humbly regret that the Gracious Speech contains no proposals in relation to the textile industry, either for temporary amelioration or long-term reconstruction, although very large numbers of Her Majesty's loyal subjects in Lancashire have no other means of livelihood.

During the Election the Prime Minister got a little worried about Lancashire. He was just a little worried about it even before the Election because, whereas the right hon. Gentleman the Chancellor of the Exchequer told us in his Budget speech that it would be wholly wrong—I think that he even said dishonest—to do more in regard to the Purchase Tax than reduce it by half, and every Minister in the finance and trade departments of the Board of Trade and the Treasury supported him in that view during the many debates throughout the week or 10 days that followed the introduction of the Budget, at the very end the Prime Minister came to the House and repudiated everything that had been said on this subject by the Chancellor and by all other Ministers who had spoken on it.
The Prime Minister announced that then and there the difficult, impossible, inequitable, dishonest thing that the Chancellor had refused to do would forthwith be done. It was described in the "Manchester Guardian" as an attempt to swindle Lancashire. The right hon. Gentleman evidently felt during the Election that the confidence trick was not coming off. So, towards the end of the campaign, he went to Manchester and made another speech about Lancashire and about cotton. It was not a very good speech, but I suppose that it was the best that the right hon. Gentleman could do. In it, he did somehow or other hold out in some sort of way some kind of prospect of something which he did not define that he was going to do for Lancashire if the Government were returned.
We have had a long Gracious Speech this year; longer than any in recent years. Lancashire is not referred to in it from the first word to the last, and yet Lancashire happens to be that part of the country which, if any part can do so, is entitled to complain that there is not now full employment, or peace in industry, or an adequate surplus in our overseas payments, or a more equitable distribution of wealth among Her Majesty's subjects.
A long time ago Edmund Burke said that each of us, as Members of this House, were Members for the whole country and not merely for any particular place in it. That remains true, and the House of Commons would be much less effective instrument of the principle of


government by parliamentary representative Government if we were to forget that or act otherwise than in its spirit. But that does not mean that a Member of this House does no have his first duty to his own constituency and his own constituents—all of them, whether they voted for him or not—in circumstances in which they are entitled to look to Parliament and to the Government for relief.
In the few minutes that I propose to speak, therefore, I shall talk about my own constituency, knowing that it is in a sense representative of the whole of this part of Lancashire. When I say "in a sense," I mean in an accentuated sense. Whatever is true of North-East Lancashire is even more true of Nelson and Colne. The House will be given the picture, and the House must determine whether the situation calls for some action by any Government.
I have represented the constituency for nearly 20 years. When I was first elected, the number of people on the electoral register was 57,000. The number of people who were on the register in 1951 was 52,000, and the number of people on the register upon this last occasion was 50,000. In other words, the number of people on the electoral register has gone down by 4 per cent. in four years. In contrast to that, we find that the total electorate of the whole country has risen by about 350,000 in a voting population of about 34 million which is about 1 per cent.
As against a 1 per cent. increase in the whole electorate, therefore, there has been a 4 per cent. decrease in my constituency in four years. I will give more figures in a moment. Because of their character, perhaps I ought to say that these people are good people. They are reliable. self-reliant people. They are skilled working-people, highly-skilled workers in highly-skilled crafts. They are conscientious and progressive.
It is a sad indictment of any Government's economic and social policy if people like that are left with a feeling of insecurity, left without employment, left to feel that they are neglected and are the cinderellas of the community. It is no fault of theirs. All this part of North-East Lancashire was declared three years ago a Development Area because it was thought necessary to diversify its industry. The main industry is the cotton industry,

and I shall come back in this connection to something which the hon. Member for Scarborough and Whitby was saying just now.
In the North-East Lancashire Development Area, the proportion of registered workers in the cotton trade is 44 per cent. In Nelson alone the proportion is 65 per cent. The population is ageing. In the area generally, the percentage of old-age pensioners is 13; in this district it is 17. What is necessary? Here are two towns which depend as to two-thirds of their working population upon one industry, which no one believes can ever dominate world markets as it did 70 or 100 years ago. It is conceded by the Government that the area needs Government assistance in order to diversify its industry. The hon. Gentleman will say, "It is so easy to go somewhere else and get another job." What does he recommend that I should tell my constituents who no longer find a place to work in the cotton industry, which is the only thing they know?

Mr. Spearman: Does the hon. Gentleman advocate that Government action should maintain an industry at a fixed size at a time when the men and resources of that industry could be used for making other things which the foreigner wants to buy?

Mr. Silverman: If the hon. Gentleman will pay me the compliment of listening to what I say before he intervenes, he may find that his intervention is unnecessary. In my very last sentence which I ventured to utter before he intervened, I thought I said exactly the opposite. I said that we could not expect the industry to be maintained as it was before.
I have accepted the view of the Government that the industry in this area ought to be diversified. I am quoting the Government's view. That does not mean sending the people away. It does not mean asking them to accept three weeks' or three months' notice or moving their homes or uprooting themselves, or unlearning the skills they know and trying to acquire new skills at the age of 40. It does not mean anything like that. It means taking new industries into the Development Area, not taking the people out of it. That has been the whole policy of both parties for nearly 20 years, and the Government decided to apply it to this part of Lancashire three years ago. We have had no benefit out of it at all.
Every time I say this the right hon. Gentleman the President of the Board of Trade scores a cheap jeer from the ranks behind him by saying how grateful he is to me for once more giving him the opportunity of saying that the Government had built, or were building, or were proposing to build in this area the biggest factory that has ever been built with Government financial assistance.
That factory is nine miles away. It is on the extreme tip of the Development Area. It is in that part of the area which least needs it. I do not say that it does not need it at all, but it needs the assistance it will get least in comparison with other parts. And, by what no doubt is a mere coincidence, it is in that part of the Development Area which alone is represented by a Conservative Member.
Nothing is done. There is no assistance—no help—no advice. Far from bringing any assistance to the town, the Government are retaining for their own purposes our two best and most modern mills—one of them to keep Ministry of Pensions and National Insurance records and the other as an Admiralty storehouse—they are two of the most modern factories we have. The Government neither bring us factories themselves, nor assist us to build factories, nor will they even release the factories that are ours. We could have diversified industry ourselves to the extent of those two factories if only they were given up and their contents stored, perhaps in the Midlands or in the London area, which already has a sufficient diversity of light industry.
It is not only a question of bringing new industries. In Lancashire, we are not proposing to write off cotton. In the years following the war this country depended primarily and for some years almost solely upon the Lancashire cotton industry to restore its financial balance; to get it out of the bankruptcy to which 20 years of Tory Government and six years of war had led the country. That was actual bankruptcy, not the controversial party bankruptcy about which hon. and right hon. Members were talking in the Election. I mean the real bankruptcy of which Lord Woolton and the right hon. Gentleman the Member for Woodford (Sir W. Churchill) were speaking at the beginning of 1945.
It was cotton, first and foremost that got us out. In those years we were talking not about the contraction of the industry but of expanding it. We had production drives, and called upon managements, employers and workmen's representatives to join in a common effort to increase the production of cotton—telling the people that the old insecurity would never return. And they did—they increased the production enormously. Then came the old slumps. At Easter, 1952, 200,000 Lancashire weavers were on the dole—and the whole weaving manpower force is only 300,000. That means that in 1952 two out of three were unemployed. I admit it only lasted a few months, but it is coming back again now.
If we go on in that way will we get young people ever again to commit themselves to this industry or to remain in the cotton towns? The bringing of alternative industries into towns of this kind is beneficial not only for the industries themselves and for the people employed in those industries but also for the cotton trade. We cannot have a continually ageing skilled population. There must be recruitment. If the young people are not encouraged, or if it is not made possible for them, to remain, we shall lose the whole of our working population in the cotton trade as well as in other trades.
On the one side, there is the failure to do anything for the Development Area as such. On the other side, there is the total and complete failure of the Government to have any plan for the cotton industry at all. Are the Government never going to consider the matter constructively?
Is there never to be a long-term policy for the industry? Various hon. Members have intervened, including the hon. Member for Scarborough and Whitby who asked me whether it should be at this level or that level, or whether by some artificial means it should be maintained at some uneconomic level. I do not know the answer to these questions. What I do know is that somehow somebody or other must take the responsibility of determining at what level the cotton industry should be maintained. Otherwise the result will be that we shall have no cotton industry at all.
The hon. Gentleman who was talking about protection during the Election


ought to go to a mill gate meeting, where they make cotton piece goods, and then walk 50 yards to Woolworth's stores and see shirts made of the same material being sold for 5s. 6d., 6s. 6d. and 7s. 3d. —at prices below the price at which our products could be sold in this country if the workers worked all week without any wages at all. Does the hon. Gentleman really mean that nothing ought to be done about that?

Mr. Spearman: I did not oppose antidumping measures.

Mr. Silverman: It is nothing to do with dumping at all. There is no suggestion of the articles being subsidised at the source. No anti-dumping measures will deal with the problem. A tariff will not deal with it. The Government must make up their minds whether they want a cotton industry at all. If they do, they must then decide at what level they think they can maintain it permanently on a stable basis, and what measures they have in mind to make sure that these people, who constitute a large section of our population, will not be ignored but will be rescued from the insecurity and poverty in which they now live.

8.58 p.m.

Mr. Herbert Morrison: I am sorry if my rising prevents the usual flow of debate between this side of the House and the other, but there was an arrangement between the Leader of the House and myself that we would divide the last hour equally, and it is necessary that I should proceed with the case for the Opposition which will lead, after the Minister has spoken, to the first Division of the House of Commons in the new Parliament. It is, therefore, something in the nature of an historic occasion, and we hope that the result of the Division will be satisfactory to the Opposition, although we are not sure that it will be.
We heard from the Chancellor of the Exchequer this afternoon a speech which I did not think answered the very fine and able speech of my right hon. Friend the Member for Leeds, South (Mr. Gaitskelll. He traced the serious effect of the strikes, to which I shall be referring. I hope that the Government will not be tempted to use these incidents—which, of course, are

regrettable to all of us, whatever view we may hold about their merits—as an alibi for the economic troubles that may face the country, and, indeed, the prospect of which, we think, was one of the reasons for the holding of the Election on the date on which it was held.
The Chancellor made an attack on my right hon. Friend about the industrial disputes which, I thought, was unjustified and unreasonable. He was asked to make a statement urging dividend restraint and care in profits. He did not respond to that invitation. What he said was that we must have a combination of incentives and discipline. What the working people fear is that it is in the mind of the Government that incentive is to be provided for the employers by tax remissions and that discipline is to be saved for the workers.
The Chancellor also urged control of selfishness and restrictive practices, but the whole philosophy and doctrine of the Conservative Party before, during and after the General Election has been the encouragement of selfishness. It is the basis of their whole sociological conception, and they are doing little or nothing to stop monopolies and restrictive practices. [HON. MEMBERS: "0h."] Yes, I think that that is so. In these circumstances we take the view on this side of the House that the Chancellor's speech is perhaps the greatest justification of our Amendment.
In the limited time at my disposal I want to try to deal with some fundamentals of parliamentary and governmental economic and social policy which were implicit in my right hon. Friend's arguments, although, very rightly, he dealt with a number of specific and detailed matters. I want to get to the fundamentals behind my right hon. Friend's arguments and to make a comparison between the principles for which we, the Labour Party, stand and the principles for which the Conservative Party and the Government stand.
In the first place, I ask myself, if we are to promote the well-being of the nation as a whole, the economic efficiency of the nation, its economic health, the security of its people, the well-being of industry and the legitimate rights of all sections of society, what is necessary in


governmental and parliamentary policy? Surely it is that there should be, throughout all sections of society and among all classes of the community, public spirit and co-operation for the national good. That is essential if what are called, rightly or wrongly, both sides of industry and all those engaged in the economic and social life of the nation are to pull their weight and to make their contribution; it is desirable that all of them should be animated by public spirit, the pursuance of the public good and a sense of national well-being and national advantage in all their day-to-day activities.
That ought to be an elementary requirement of patriotism from the point of view of hon. Members and, indeed, from our own point of view. To us it seems to embrace the ethical and moral principles of that Socialism for which we stand. But in any case, if this is to be achieved, it is desirable not only that the community should be asked to live up to such standards of public interest and public effort. If it is to be done it must also be apparent to the community that Government and Parliament, too, are active to that end and are doing things with a view to furthering the public interest and the public good.
It is here that we begin to part company very sharply with Her Majesty's Government. A passage from the Gracious Speech, which I will quote, is typical of what runs through the Gracious Speech and typical of the speeches of the right hon. Gentlemen who have addressed us on behalf of the Government. Here is one quotation:
The full employment of My People will continue to be the first care of My Ministers. To this end they will actively seek the cooperation of employers and workers in ensuring that full employment and expanding output shall not be jeopardised.
The Government have a perfect right to ask for the energetic co-operation of employers and workers. But what the Government have no right to do is to seek individual, unaided co-operation of workers and employers while the Government themselves are doing nothing about it in any positive or concrete sense of the term.
That is the complaint which we have about the whole basis of the Gracious Speech and the speeches which we have

heard from Ministers during this debate. We ought to hear from the Leader of the House, who, I understand, is to reply to the debate, what the Government intend to do, with a view to making it easier for employers and workers to do what the Government want done.
How will Ministers actively seek this co-operation, and how will they and the Government do things with a view to promoting full employment and maintaining full employment and greater productivity? It is not enough for the Government to preach to industry. They have an obligation to be doing things—positive things—so that industry on both sides may be assisted in doing what the Government want done. To that end, I should have thought that it was necessary for Ministers to engage continuously in the education of the nation as to the facts and the problems of our economic situation.
It is not enough for them to say, "Don't do this and don't do that." It is for them to say what ought to be done and what is necessary for our economic and social progress and well-being. I do not think that this has been adequately done. On the contrary, the Government before the Election, duing the Election, and since the Election—although the Chancellor of the Exchequer, I must say, has spoken with more caution today than he did during the Election—showed a tendency to say to the country, "Everything is well; there is nothing to worry about; just let things go on as they are and all will be added unto you."
That seems to me to be an abnegation of the Government's duty. They have, presumably, a great store of economic and financial knowledge in the Treasury and in the economic Departments of State, and this information ought regularly and systematically to be produced for the knowledge and guidance of the nation, so that all those concerned in industry and commerce may be aware of the facts and able to play their part in this matter. It is not wise continuously to preach that merely because there is a Conservative Government in office there is nothing to worry about—all is well: you can go easy: let things drift.
I do not say that the Government are telling industry, "You can go easy," but their policy is conducive to a feeling of contentment, over-satisfaction and


self-complacency which is not helpful to liveliness and effort in industry. Indeed, it does the very opposite, and I charge the Government with running a line which is liable to produce slackness, indifference and social selfishness which will not be for the good of the nation or for our economic and social welfare.
Industry is told, "Do as you like." There is scorn for the work of the Labour Government at the end of the war—scorn that we did as we did and supervised the use of the nation's economic resources so that first things should come first and that the nation could rebuild its industries at a time when our economy was inevitably wrecked. It was the right hon. Gentleman the Member for Woodford (Sir W. Churchill) who told a distinguished American that after the war we would be bankrupt, and substantially and inevitably we were.
It was necessary for the Labour Government to pull things together and supervise the use of our economic resources in order to see that first things came first. What did we get in return? A lot of scorn because there were controls and rationing, which were as inevitable in those days of post-war shortages as they were in the days of the war, under Lord Woolton.
I want to say this to the Government. If there had been a Conservative Government in power after the General Election of 1945 and if their policy had followed the lines they were talking about at the time of the General Election, and if they had handled the nation's immediate post-war problems as they were handled by a predominantly Conservative Government after the First World War, our economy would have been wrecked, our industry would have been in chaos, industrial disputes would have been much more extensive and this Government would not have had the chance, if it had been in office in 1951, to build upon the healthy economy created by the Labour Government. [Laughter.] I have never seen such ingratitude as the hilarity from hon. Members opposite. They ought to be passing a vote of thanks to the Labour Government, for if we had not done what we did in conserving and reconstructing the national economy after the war then the Government, if they had come to power in 1951, would have faced infinitely greater difficulties than they did.
Now industry is being told, "Do as you like." The moral doctrine that is being actively urged by certain Ministers, Members of Parliament and newspapers is the doctrine of every man for himself and never mind the nation. It is the doctrine of so-called Conservative freedom and it is extreme—not only extreme Toryism, not only extreme pro-private enterprise, but it is extreme anti-Socialism which pleases hon. Members opposite. As a Socialist, I think it is wrong.
The Government inherited organisations of an economic character which were actively useful in the days of the Labour Government in providing the liaison between Government, employers' organisations and representatives of the Trades Union Congress. There was the National Joint Advisory Council, associated with the Ministry of Labour. There was the National Production Advisory Council for Industry, associated with the Board of Trade or the Treasury. I rather fancy that it has gone back to the Board of Trade.

Mr. R. A. Butler: The regional organisation is with the Board of Trade and I am Chairman of it as Chancellor of the Exchequer.

Mr. Morrison: Then it is a hybrid. I do not know whether these bodies are being actively used now, but one does not hear a great deal about them. I would like to know whether they are being properly used.
What has become of the regular economic Press conferences, which I started when I was Lord President of the Council and which were followed up soon afterwards by Sir Stafford Cripps when he took over economic co-ordination at the Treasury and later by my right hon. Friend the Member for Leeds, South? In this respect, I want to pay a tribute to the Press, which we do not often do on this side of the House. The Press really were very good about these economic Press conferences. They shot questions at us. All sorts of people, from daily newspapers and class newspapers, were there. The conferences were held fairly regularly and resulted, with the co-operation of the newspapers, in a great deal of economic education of the nation as a whole.
It is from the undertanding by the nation as a whole of our economic


troubles and of how the individual citizen can play his part in assisting to solve those economic troubles that good things can come. I do not hear anything much of those conferences now. They seem to have been dropped, and it is all part of the policy of letting things drift. There is no sign of Ministerial educational speeches in the country. Merely to ask for co-operation without giving advice and leadership is to leave things in the air. This policy of laissez faire, of which. as my right hon. Friend said, the modern name is Conservative freedom, in itself the policy of letting things drift, leaving things alone and letting things rip, weakens the right and authority of the Government to ask for the active cooperation of the ordinary citizen in grave matters of economic and industrial policy.
Given leadership, what should the Government ask of the employers for their co-operation in assisting our way forward? They should ask the leaders of private industry, as well as of the leaders of public industry, that industry should be conducted with a sense of the national well-being and with a sense of public spirit behind it, whether the industry is publicly or privately owned.
The Government should ask private industry that its profits and dividends should be reasonable and not excessive. Now and again something is said, but, on the other hand, the whole policy of the Government is encouraging dividends and profits to be higher. Figures were given by my right hon. Friend. The Government are not doing enough in that direction. They should ask the private employers that their surpluses should be used for reinvestment in their undertakings, for expansion and productivity, instead of scattering the surplus about in the form of bonus shares, capital gains and take-over bids, none of which necessarily serves the interests of industrial expansion and productivity. Industry ought regularly to be returning its surpluses over a reasonable dividend and a reasonable profit, ploughing them back into the industry with a view to capital development, increased technical efficiency, and so on.

Captain Charles Waterhouse: Would the right hon. Gentleman explain what he means when he says that profits are scattered about in bonus shares?

Mr. Morrison: I should have thought that that was within the knowledge of the average Member of the House, and ought to be within the knowledge of the right hon. and gallant Member.
It is necessary that there should be an active policy for the export trade, in which the Government themselves ought to take an active interest. It also is necessary that there should be abandonment of the monopolistic and restrictive practices which have been going on and which have not been in any way discouraged by the Government. I should like to quote from the "Sunday Times," which, on the occasion of the Chancellor's Election broadcast, said this:
Mr. R. A. Butler, Chancellor of the Exchequer, in a party election broadcast last night, said that the Conservatives did not intend to tolerate monopolies or price rigging.
We have not heard a word from the Government about what they are doing or intending to do about monopolies or price rigging—not a word. The President of the Board of Trade said, this afternoon, merely that he would cause inquiries to be made.
The Prime Minister has referred to the great blessings of the denationalisation of iron and steel. What was part of the argument of the Government for that? It was that they were to restore competition to the iron and steel industry. They were restoring the competitive spirit between the various firms in iron and steel and removing the cold hand of the State from the supervision of the industry.
What was the first thing that we experienced thereafter? When the London County Council received ten tenders for iron and steel and its construction for the County Hall extension, they were all exactly the same, to the last penny. Who are the gentlemen who do these things in the iron and steel industry? Who are the people who arrange these cartel prices, which they have just done again in Australia—some electrical people—with the result that we have upset our good name in the Commonwealth of Australia? Other local authorities are also experiencing the same thing. The gentlemen who arrange these restrictive practices whereby the consumer has no effective competition are Conservatives, who believe in Conservative freedom. This is the result of Conservative freedom, and we still do not know what the Government are going to do about it.

Mr. Robson Brown: Mr. Robson Brown (Esher) rose—

Mr. Morrison: I have not very much time; I am so sorry.
I do not attach too much importance to what the Chancellor said, because I do not suppose that he took it very seriously himself. After all, it is the same Chancellor of the Exchequer who, at Berwick in the Election of 1951, and who was supported by another member of the Government, said that he would not reduce the food subsidies. I asked him repeatedly during the Election why, in his first Budget within less than 12 months, he did reduce the food subsidies. I have never had the answer to this day, but there is no need to take up time—

Mr. R. A. Butler: I thought it unnecessary to add to the statement which I made at some length in my first Budget, explaining the situation exactly and accurately representing what I said.

Mr. Morrison: That really is a "phoney" answer. There was an Election going on, and the right hon. Gentleman was repeatedly asked why he gave a specific undertaking in 1951 and broke it as quickly as he could in his first Budget. The electors were entitled to know, and they were never given any information about it. If the right hon. Gentleman thinks that the average elector walks around with copies of his 1952 Budget speech in his pocket, he is being unduly conceited and he must not expect that to be so.
The Government are not giving that firm guidance and leadership to the employers that they ought to give. It is true that the Government have a right to expect, and I think they have received, the reasonable co-operation of the trade unions of the country and, in particular, the Trades Union Congress. I think everybody will agree that the Trades Union Congress in recent troubles has been very helpful. The Government—any Government—have a right to expect from the trade unions as well as the employers that degree of general co-operation that ought to be available. Whether they can get that co-operation, an adequate degree of it, especially from the trade union rank and file, depends upon whether the Government themselves play their part in protecting social justice for the poorer people of the country, and do

not merely lean over backwards to protect the rights of the well-to-do and to remit taxation from their shoulders.
But that is what the Government have been doing. If the Government are one-sided in favour of Conservative freedom for employers the co-operation of the workers will be difficult to obtain. So it will be if the Government are indifferent to the cost of living; and the Government are indifferent to the cost of living and to the consumer interest. [HON. MEMBERS: "Oh."] Oh, yes, the Government are indifferent to the cost of living and to the consumer interest. Are we to have the vicious circle of a chase of wages and prices? It may be that they will cancel out at the end of the day, and it may be argued, therefore, that it does not matter. It does matter, however, to the export trade, because the prices of our exports are tending to go up as a consequence of these things.
If the Government pursue these policies, and deliberately stimulate chaos in the transport industry, as they have done by the denationalisation of road commercial transport, if they encourage private monopoly in iron and steel, and all these equal tenders, and the sort of thing they have encouraged by setting up the Independent Television Authority, we say that the Government are wrong. The Government's anti-nationalisation dogma is all to the bad.
Subject to fair play and adequate action, however, the Government have a right to ask for trade union co-operation and restraint. That I would desire, and so would my hon. Friends. It cannot be obtained either from the trade union leaders or from the ordinary rank and file of the trade union movement if the Government publicly acclaim the policy of every man for himself and abnormally high profits and dividends. The Chancellor refused today to say anything about it with a view to restraining it.
This sort of thing, this treatment of one class of the community in one way and of the others in the other way, will stir up industrial unrest, even unofficial strikes, which we all on this side of the House deplore. They are bad. We do not like them. If the Government go in for the policy of every man for himself on whichever side of industry he may be employed, but especially if he is on the employers' side, the view that every man


can do what he likes, if the Government are indifferent to the social well-being of the nation, then the Government have no right to complain about industrial disputes and industrial unrest. They are, indeed, just as much the authors of industrial unrest and unhappiness as the Communists themselves are, and the Government are responsible because of the prices policy they are pursuing. The Conservative Party, by its policy of social indifference, its anti-social policy, is helping the Communists more than the Labour Party ever did or ever will.
It is not right for the Government to call for the co-operation of the workers and then to stand aloof and be indifferent. It is a mistake to assume that all will be well if we let things drift and merely relieve the rich of taxation. We have to do other things. In some quarters there was scorn of, for example, the idea of controlling imports, of being selective about imports. Yet control and selection there may have to be. It may be necessary. There is a scorn of bulk purchase, which has been scattered; a scorn of Commonwealth bulk purchase; a scorn of co-operation with the great producers of the Commonwealth countries and the Colonies, although that is much desired by many of them. That is bad from the point of view of the Commonwealth and the Colonies, as well as the well-being of British industry.
And so, in our judgment, there has to be some active work on the part of the Government and Parliament itself. We are entitled to know from the Leader of the House whether the Government intend to be active and do anything about promoting the objectives set out in the Gracious Speech; or whether they will stand aside and be indifferent to these matters. We must face the fact that full employment is not automatically achieved, that it requires effort; that the balance of payments is not automatically achieved, that it requires effort; that the export trade is not automatically achieved, that it requires effort. The House has a right to know what the Government propose to do about these things and what they will ask Parliament to do.
It is for these reasons, because we feel that the Government are indifferent and are merely drifting along and pursuing a

class policy instead of a policy of the nation, that we have moved this Amendment and ask for its support by the House of Commons.

9.32 p.m.

The Lord Privy Seal (Mr. Harry Crookshank): This is the end of a week's debate. It has been a very interesting debate, for one reason at any rate, in that we have had no less than 14 maiden speeches. May I congratulate the hon. Members concerned in bulk, because I do not think it necessary to mention each one. But I will say that I and some of my older colleagues are lost in admiration, because in our day we used to
… linger shivering on the brink.
And fear to launch away.
But now they dive straight in and speak with complete assurance, and to the satisfaction of those lucky enough to hear them.
The debate has naturally covered a very wide field. We have had, I think, two interesting little domestic instances. There was the very dramatic reunion of one hon. Member with his lost family and there was the interesting discovery that our wastepaper baskets are no longer sacrosanct from the eye of an hon. Gentleman opposite—in fact, we have been warned. But the most curious feature of this debate is the official Amendment.
When one comes to look at Amendments, one naturally looks to see both what is in them and what is left out.

Sir Frederick Messer: How can one see what is left out?

Mr. Crookshank: On the occasion of the Gracious Speech, it is normal for the Opposition of the day to rally its forces behind some stirring battle cry; to try to pinpoint some of the Opposition's alternative suggestions, either in some specific matter of policy referred to in the Gracious Speech, or in a wider framework of their political nostrums. But this Amendment does not do anything of the kind. It merely lists a number of objectives which, broadly speaking, are common to both sides—most of which are referred to in the Gracious Speech itself —and expresses the opinion that we are not likely to achieve them. That is all. It is really the most complete pallid negative that I have ever seen. There is no offensive action at all. They say they are


not calculated to achieve these things; we say they are. It is really like schoolchildren.
Of course, the real reason they are not pinpointing any of the alternatives is that they themselves do not know what they are. We all know that most of the rabbits which they produced out of the hat for the Election died of myxomatosis. The up and coming young men who are to be elected to the Shadow Cabinet—now reduced to a mere shadow with the departure of those venerable figures suffering from senility—have not yet started producing any rabbits.
There is really nothing at all in the Amendment. Of course, it is not really the stalwart personalities who ought to be leaving on alleged grounds of senility but some of the old policies, because it is quite obvious that the country does not want them and, as hon. Members opposite are not prepared to argue them in the House, I do not see that there is much use in them at all.
The other thing which has struck me about the Amendment is that we seem to have lost sight of all the things for which we used to be censured. There were censures in the last Parliament, which, after all, was not a 100 years ago, but quite recently. There used to be a lot about housing. We take it that our policy is now thought to have been a good and successful one, and that no more criticism of it is required.
There is nothing about food, nothing about red meat, nothing about our slashing the social services—nothing at all But what is even more remarkable—to take the ball back into the other court—is that in no speech which I have heard, except sometimes when a quotation was being made, or something of that sort—certainly neither the opening speech nor the concluding one mentioned it—has there been any reference at all to nationalisation and its effectiveness for dealing with our great problems, It is really very strange.
Ah well, we have to take things as we find them. Here is this Amendment. The first thing that it regrets is
that the measures set forth in the Gracious Speech are not calculated to achieve full employment.
That is a bit of an advance on what we had before, because, apparently, it is now

admitted that full employment is one of our objectives. It used to be supposed not to be. It used to be said that we wanted unemployment.
Only four years ago, the right hon. Gentleman who was then the President of the Board of Trade was saying in his Election address that Labour had abolished mass unemployment and that the Tories would bring it back. Of course, as late as November, 1952, the right hon. Member for Blyth (Mr. Robens) was saying that we should have a million out of work in six weeks. All that seems to have gone, and it is now accepted that full employment is one of our objectives.
All that is alleged is that what we are going to do will not maintain it. Well, time will show. I am not a prophet, but there is no reason why we should not maintain it as we did all through the last Parliament, provided, of course, that we can steer clear of these industrial disputes and that we all pull together and work hard as a nation.
I really must take up the point which the right hon. Gentleman for Lewisham, South (Mr. H. Morrison)—I will come back to his speech later on—made towards the end of his speech when he gave the impression that it was owing to something that we had done that the industrial unrest of today existed—

Mr. H. Morrison: In the docks.

Mr. Crookshank: —in the docks. Surely the right hon. Gentleman realises, as everybody else does, that that dispute is not about money at all; it is an inter-union trouble and certainly has nothing to do with the Government. Nothing that the Government could have done, so far as I know, would have been welcomed in a dispute between two rival unions. The right hon. Gentleman has been giving us a lot of good advice for the last half hour, but I hope he will not repeat that, because it is wrong—and it is quite contrary to the high moral purposes which he was trying to ascribe to his own party, as compared with ours.
Now let me turn to the question of full employment. Is it suggested that we have not got it? My right hon. Friend the Chancellor of the Exchequer pointed out today that the latest figures show that the proportion of unemployed is 1 per cent.

Mr. S. Silverman: What is the Lancashire figure?

Mr. Crookshank: I am speaking about the figure for the whole country. I heard the speech of the hon. Member for Nelson and Colne (Mr. S. Silverman) and took note of it mentally, if nothing else. If 1 per cent. unemployed is not full employment, may I be told what is full employment? If what is happening now is not sufficient, does the party opposite want controls introduced to secure full employment?—because we had better know where we stand on that issue. Do they want to go back to things like the direction of labour and the allocation of materials? As a matter of fact, in the last Parliament we have been able to see full employment maintained, and I see no logical reason why that should not continue, with the provisoes that I have already mentioned.
The next point concerns stable prices. The Opposition thinks that what we are proposing to do is not calculated to achieve stable prices. Right hon. Gentlemen opposite start talking about stable prices, but that is the one thing that they could not assure when they were in office. In spite of all their policies of subsidies, controls, bulk buying and the rest of it, they had no stability at all. It is since we have been in office that we have got somewhere near stability, whereas they were not within a thousand miles of it.
Next comes the question of peace in industry. The party opposite says that what we are doing is apparently not calculated to that end. Surely we are all at one in wanting peace in industry, but if someone is trying to say that industrial unrest is due to this Government's policy—and I have already rebuked the right hon. Member for Lewisham, South for saying something like this—or due to the fact that there have been increases in the distribution of profits—which was the thread running through some Opposition speeches—I would merely say that those charges are really irrelevant political red herrings. If the distribution of profits leads to industrial unrest, what is the explanation of the fact that, during the last year, three-quarters of the strikes and half the time lost have occurred in nationalised industries?—which, of course, are statutorily debarred from distributing any profits, if they ever make

them. No, Sir. What do the Opposition want? Do they want us to introduce some form of legislation for industrial peace? Of course not.
I turn to the words
adequate surplus in our overseas payments.
That depends, of course, upon the factors about which my right hon. Friend was speaking earlier this afternoon when he made a serious speech to the House, and through the House to the country, about the outlook as a result of the stoppages of the last month. I do not feel that it is my duty to repeat what my right hon. Friend said there. As to the adequate surplus, it is the fact that in the time of our predecessors they began in office with deficits and eventually moved to the surplus stage. Then, by 1951, the whole lot was wiped out in that disaster. [An HON. MEMBER: "The Korean War."] It had nothing to do with the Korean War.
It is suggested that our policies and the schemes outlined in the Gracious Speech will not bring about
a more equitable distribution of wealth
among Her Majesty's subjects. A good many speeches today have been made on that subject, but this is in fact happening all the time. Real wages have gone up since we have been in office, since 1951, by 6 per cent. They went down in the time of the Labour Government and they went up in our time. Real earnings have gone up since the previous Government took office in 1951 by no less than 9 per cent., and this year two-and-a-half million people are ceasing to pay Income Tax as a result of the Budget of my right hon. Friend the Chancellor. That is not redistribution, but it is refraining from taking out of the people's pockets the money that they earn. Again, 16 million other people are paying less Income Tax. All this is part of the general plan which has animated the financial policy of my right hon. Friend since he went to the Treasury.
What is needed? It is perfectly obvious, and it has been said many times, that the more new wealth we can create the more there is to share. It is much more interesting to discuss that aspect of the problem than merely to think in terms of an almost statutory amount of which no one can get any more, and therefore, "Small pieces to everybody." The policy should be "New wealth, and more to share."
We are moving, and we can well be doing so, into an era of abundance and prosperity. I wish there had been a larger number of Members in the House on Friday morning to hear the most eloquent speech on that theme by my hon. Friend the Member for Somerset, North (Mr. Leather), in which he pointed out how, in his constituency, the workpeople —miners and others—were now finding out, as I believe millions of our workers are finding out, that what the party opposite has always been telling them is not true, and that one can get on in this world if one does a bit more work. Of course, it is within the knowledge of hon. Gentlemen opposite that that is not only true but that it is because of the growing appreciation of that fact that they lost so many seats.
I would take up the point made by an hon. Member of one of the Fife Divisions.

Mr. William Ross: Fife is a big place.

Mr. Crookshank: He was suggesting that private industry was not ploughing back an appreciable amount of its profits and that the nationalised industries were so doing. I hope that he and others will look at the Economic Survey for last year, table 21, where they will see that out of the undistributed profits, or the income available for distribution by the companies concerned—and there was a large number of them—there was about £2,000 million at disposal. It will be seen that after other expenses have been taken out more than £1,000 million was ploughed back into fixed assets and working capital. Hon. Members will find all that there. The point I wanted to make about the nationalised industries—

Mr. H. Morrison: Mr. H. Morrison rose—

Mr. Crookshank: Whatever that figure, the point about the nationalised industries is, of course—[Interruption.]

Mr. Speaker: Order.

Mr. Crookshank: I was trying to make a point about the nationalised industries, and I must say that the present interruptions do prove that hon. and right hon. Gentlemen have nothing at all to say if they do not even wish me to answer such points of interest as were made by the right hon. Gentleman, so I shall not bother about him further.
I only wanted to say that, of course, the nationalised industries get their money for ploughing back not out of profits—they do not make them—but out of Government funds or State credit. That is where they get the amount they plough back.
A great deal of the time this afternoon was devoted—

Mr. Gaitskell: Mr. Gaitskell rose—

Mr. Speaker: The spectacle of two right hon. Gentlemen on their feet at the same time is more than I can bear.

Mr. Crookshank: There was one point about profit sharing. [HON. MEMBERS: "Divide."] Of course, the right hon. Member for Leeds, South (Mr. Gaitskell) did have half an hour this afternoon—

Hon. Members: Divide.

Mr. Speaker: Order. The House is not behaving very decorously. It ought to allow the right hon. Gentleman to proceed.

Mr. Crookshank: Everything I said at the beginning of my speech, Mr. Speaker, has been amply borne out by the exhibition we have just seen.
In the last two or three minutes, I want to bring the House back to the Gracious Speech itself. This is, of course, the first Gracious Speech in the first Parliament of the present reign. I think that in the criticisms which hon. and right hon. Gentlemen have made in their Amendment they have missed the whole theme which runs, in fact, through this Gracious Speech. After dealing with foreign affairs, world peace and Commonwealth and colonial matters, we indicate how, during this Session, we intend and hope to advance the welfare of the nation.
If hon. Gentlemen will allow me, I shall put the theme before them. Expanding production is agreed on all sides to be the ladder which leads towards the higher standards of living which are within our- grasp, and to secure that expansion in industry which we require the House will see that we intend first of all to deal with the unfair dumping of imported goods. We shall deal with abuses in the field of monopolies and restrictive practices, encourage the maximum economic production from the land, promote the development of


nuclear energy for peaceful purposes, and our financial affairs will be soundly directed.
Those are all aids for production. But production having been obtained, of course there must be movement, so there is reference in the Gracious Speech to our programme for railways and for roads. To help us secure what we desire, we look for co-operation in getting peace in industry; and having, we hope, succeeded in getting higher production, in improving communications and in securing peace in industry, we shall then

proceed with the actual welfare schemes of slum clearance, improving education, expanding schools, reducing pollution of the air and safeguarding the health and welfare of those in agriculture and forestry. Those are our plans for the welfare of the nation, but let the House realise that it is only the first phase of what this new Parliament will be called upon to do.

Question put, That those words be there added:—

The House divided: Ayes 258, Noes 339.

Division No. 1.]
AYES
[9.58 p.m.


Ainsley, J. W.
Edwards, Rt. Hon. John (Brighouse)
Jones,Rt. Hon. A. Creech (Wakefield)


Albu, A. H.
Edwards, Rt. Hon. Ness (Caerphilly)
Jones, David (The Hartlepools)


Allaun, F. (Salford, E.)
Edwards, Robert (Bilston)
Jones, Frederick Elwyn (W. Ham, S.)


Allen, Arthur (Bosworth)
Edwards, W. J. (Stepney)
Jones, Jack (Roherham)


Allen, Scholefield (Crewe)
Evans, Albert (Islington, S.W.)
Jones, James (Wrexham)


Anderson, Frank
Evans, Edward (Lowestoft)
Jones, T. W. (Merioneth)


Attlee, Rt. Hon. C. R.
Evans, Stanley (Wednesbury)
Kenyon, C.


Awbery, S. S.
Fernyhough, E.
Key, Rt. Hon. C. W.


Bacon, Miss Alice
Flenburgh, W.
King, Dr. H. M.


Baird, J.
Finch, H. J.
Lawson, G. M.


Bartley, P.
Fletcher, Eric
Lee, Frederick (Newton)


Bellenger, Rt. Hon. F. J.
Forman, J. C.
Lever, Harold (Cheetham)


Bence, C. R. (Dunbartonshire, E.)
Fraser, Thomas (Hamilton)
Lever, Leslie (Ardwick)


Benn, Hn. Wedgwood (Bristol, S.E.)
Freeman, Peter
Lewis, Arthur


Benson, G.
Gaitskell, Rt. Hon. H. T. N.
Lindgren, G. S.


Bevan, Rt. Hon. A. (Ebbw Vale)
Gibson, C. W.
Lipton, Lt.-Col. M.


Blackburn, F.
Gooch, E. G.
Logan, D. G.


Blenkinsop, A.
Gordon Walker, Rt. Hon. P. C.
McColl, J. E.


Boardman, H.
Greenwood, Anthony
McGhee, H. G.


Bottomley, Rt. Hon. A. G.
Grenfell, Rt. Hon. D. R.
McInnes, J.


Bowden, H. W. (Leicester, S.W.)
Grey, C. F.
McKay, John (Wallsend)


Bowles, F. G.
Griffiths, David (Rother Valley)
McLeavy, F.


Boyd, T. C.
Griffiths, Rt. Hon. James (Llanelly)
MacMillan, M. K. (Western Isles)


Brockway, A. F.
Griffiths, William (Exchange)
McNeil, Rt. Hon. H.


Broughton, Dr. A. D. D.
Hale, Leslie
MacPherson, Malcolm (Stirling)


Brown, Rt. Hon. George (Belper)
Hall, Rt. Hn. Glenvil (Colne Valley)
Mahon, S.


Brown, Thomas (Ince)
Hall, John T. (Gateshead, W.)
Mainwaring, W. H.


Burke, W. A.
Hamilton, W. W.
Mallalieu, E. L. (Brigg)


Burton, Miss F. E.
Hannan, W.
Mallalieu, J. P. W. (Huddersfd, E.)


Butler, Herbert (Hackney, C.)
Harrison, J. (Nottingham, N.)
Mann, Mrs. Jean


Butler, Mrs. Joyce (Wood Green)
Hastings, S.
Marquand, Rt. Hon. H. A.


Callaghan, L. J.
Hayman, F. H.
Mason, Roy


Castle, Mrs. B. A.
Healey, Denis
Mayhew, C. P.


Champion, A. J.
Henderson, Rt. Hn. A. (Rwly Regis)
Mellish, R. J.


Chapman, W. D.
Herbison, Miss M.
Messer, Sir F.


Chetwynd, G. R.
Hewitson, Capt. M.
Mikardo, Ian


Coldrick, W.
Hobson, C. R.
Mitchison, G. R.


Collick, P. H. (Birkenhead)
Holman, P.
Monslow, W.


Collins, V. J. (Shoreditch &amp; Finsbury)
Holmes, Horace
Moody, A. S.


Corbet, Mrs. Freda
Houghton, Douglas
Morris, Percy (Swansea, W.)


Cove, W. G.
Howell, Charles (Perry Barr)
Morrison, Rt.Hn.Herbert(Lewis'm,S.)


Craddock, George (Bradford, S.)
Howell, Denis (All Saints)
Mort, D. L.


Cronin, J. D.
Hoy, J. H.
Moss, R.


Crossman, R. H. S.
Hubbard, T. F.
Moyle, A.


Cullen, Mrs. A.
Hughes, Cledwyn (Anglesey)
Mulley, F. W.


Daines, P.
Hughes, Emrys (S. Ayrshire)
Noel-Baker, Francis (Swindon)


Dalton, Rt. Hon. H.
Hughes, Hector (Aberdeen, N.)
Noel-Baker, Rt. Hon. P. (Derby, S.)


Darling, George (Hillsborough)
Hunter, A. E.
O'Brien, T.


Davies, Ernest (Enfield, E.)
Hynd, H. (Accrington)
Oliver, G. H.


Davies, Harold (Leek)
Hynd, J. B. (Attercliffe)
Oram, A. E.


Davies, Stephen (Merthyr)
Irvine, A. J. (Edge Hill)
Orbach, M.


Deer, G.
Irving, S. (Dartford)
Oswald, T.


de Freitas, Geoffrey
Isaacs, Rt. Hon. G. A.
Owen, W. J.


Delargy, H. J.
Janner, B.
Padley, W. E.


Dodds, N. N.
Jay, Rt. Hon. D. P. T.
Paget, H. T.


Donnelly, D. L.
Jeger, George (Goole)
Paling, Will T. (Dewsbury)


Dugdale, Rt. Hn. John (W. Brmwch)
Jeger, Mrs. Lena(Holbn &amp; St.Pncs,S.)
Palmer, A. M. F.


Dye, S.
Jenkins, Roy (Stechford)
Pannell, Charles (Leeds, W.)


Ede, Rt. Hon. J. C.
Johnson, James (Rugby)
Pargiter, G. A.




Parker, J.
Smith, Ellis (Stoke, S.)
Weitzman, D.


Parkin, B. T.
Snow, J. W.
Wells, Percy (Faversham)


Paton, J.
Sorensen, R. W.
Wells, William (Walsall, N.)


Peart, T. F.
Sparks, J. A.
West, D. G.


Plummer, Sir Leslie
Steele, T.
Wheeldon, W. E.


Price, J. T. (Westhoughton)
Stewart, Michael (Fulham)
White, Henry (Derbyshire, N.E.)


Price, Philips (Gloucestershire, W.)
Stokes, Rt. Hon. R. R. (Ipswich)
Whiteley, Rt. Hon. W. (Blaydon)


Proctor, W. T.
Stones, W. (Consett)
Wigg, George


Pryde, D. J.
Strachey, Rt. Hon. J.
Wilcock, Group Capt. C. A. B.


Pursey, Cmdr. H.
Strauss, Rt. Hon. George (Vauxhall)
Wilkins, W. A.


Rankin, John
Stross,Dr.Barnett(Stoke-on-Trent,C.)
Willey, Frederick


Reeves, J.
Summerskill, Rt. Hon. E.
Williams, David (Neath)


Reid, William
Swingler, S. T.
Williams, Rev. Llywelyn (Ab'tillery)


Rhodes, H.
Sylvester, G. O.
Williams, Ronald (Wigan)


Robens, Rt. Hon. A.
Taylor, Bernard (Mansfield)
Williams Rt. Hon. T. (Don Valley)


Roberts, Albert (Normanton)
Taylor, John (West Lothian)
Williams W. R. (Openshaw)


Roberts, Goronwy (Caernarvon)




Robinson, Kenneth (St. Pancras, N.)
Thomas, George (Cardiff)
Williams, W. T. (Barons Court)


Rogers, George (Kensington, N.)
Thomas, lorwerth (Rhondda, W.)
Willis, E. G. (Edinburgh, E.)


Ross, William
Thomson, George (Dundee, E.)
Wilson, Rt. Hon. Harold (Huyton)


Shawcross, Rt. Hon. Sir Hartley
Thornton, E.
Winterbottom, Richard


Shinwell, Rt. Hon. E.
Timmons, J.
Woodburn, Rt. Hon. A.


Short, E. W.
Tomney, F.
Yates, V. (Ladywood)


Shurmer, P. L. E.
Turner-Samuels, M.
Younger, Rt. Hon. K.


Silverman, Julius (Aston)
Ungoed-Thomas, Sir Lynn
Zilliacus, K.


Silverman, Sydney (Nelson)
Usborne, H. C.



Skeffington, A. M.
Viant, S. P.
TELLERS FOR THE AYES:


Slater, Mrs. H. (Stoke, N.)
Warbey, W. N.
Mr. Popplewell and Mr. Pearson.


Slater, J. (Sedgefield)
Watkins, T. E.





NOES


Agnew, P.
Cole, Norman
Gomme-Duncan, Col. A.


Aitken, W. T.
Conant, Maj. Sir Roger
Gough, C. F. H.


Allan, R. A. (Paddington, S.)
Cooper, Sqn. Ldr. Albert
Gower, H. R.


Alport, C. J. M.
Cooper-Key, E. M.
Graham, Sir Fergus


Amory, Rt. Hn. Heathcoat (Tiverton)
Cordeaux, Lt.-Col. J. K.
Grant, W. (Woodside)


Anstruther-Gray, Major W. J.
Corfield, Capt. F. U.
Grant-Ferris, Wg. Cdr. R. (Nantwich)


Arbuthnot, John
Craddook, Beresford (Spelthorne)
Green, A.


Armstrong, C. W.
Crookshank, Capt. Rt. Hon. H. F. C.
Gresham Cooke, R.


Ashton, H.
Crosthwaite-Eyre, Col. O. E.
Grimond, J.


Astor, Hon. J. J,
Crouch, R. F.
Grimston, Hon. John (St. Albans)


Atkins, H. E.
Crowder, Sir John (Finchley)
Grimston, Sir Robert (Westbury)


Baldock, Lt.-Cmdr. J. M.
Crowder, Petre (Ruislip—Northwood)
Gurden, H. E.


Baldwin, A. E.
Cunningham, S. K.
Hall, John (Wycombe)


Balniel, Lord
Currie, G. B. H,
Hare, Hon. J. H.


Banks, Col. C.
D'Avigdor-Goldsmid, Sir Henry
Harris, Frederic (Croydon, N.W.)


Barber, Anthony
Dance, J. C. G.
Harris, Reader (Heston)


Barlow, Sir John
Darling, Sir William (Edinburgh, S.)
Harrison, A. B. C. (Maldon)


Barter, J. W.
Davidson, Viscountess
Harrison, Col. J. H. (Eye)


Baxter, Sir Beverley
Davies,Rt.Hon.Clement(Montgomery)
Harvey, Air Cdre. A. V. (Macclesfd)


Beamish, Maj. Tufton
Deedes, W. F.
Harvey, Ian (Harrow, E.)


Bell, Philip (Bolton, E.)
Digby, S. Wingfield
Harvey, John (Walthamstow, E.)


Bell, Ronald (Bucks, S.)
Dodds-Parker, A. D.
Harvie-Watt, Sir George


Bennett, Dr. Reginald
Donaldson, Cmdr. C. E. McA.
Hay, John


Bevins, J. R. (Toxteth)
Doughty, C. J. A.
Head, Rt. Hon. A. H.


Bidgood, J. C.
Drayson, G. B.
Heald, Rt. Hon. Sir Lionel


Biggs-Davison, J. A.
Dugdale, Rt. Hn. Sir T. (Richmond)
Heath, Edward


Birch, Rt. Hon. Nigel
Duncan, Capt. J. A. L.
Henderson, John (Cathcart)


Bishop, F. P.
Duthie, W. S.
Hicks-Beach, Maj, W. W.


Black, C. W.
Eccles, Rt. Hon. Sir D. M.
Hill, Rt. Hon. Charles (Luton)


Body, R. F. S.
Eden,Rt.Hn.Sir A.(Warwick&amp;L'm'tn)
Hill, Mrs. E. (Wythenshawe)


Boothby, Sir Robert
Eden, J. B. (Bournemouth, West)
Hill, John (S. Norfolk)


Bossom, Sir A. C.
Elliot, Rt. Hon. W. E.
Hinchingbrooke, Viscount


Boyd-Carpenter, Rt. Hon. J. A.
Emmet, Mrs. T. A.
Hirst, Geoffrey


Boyle, Sir Edward
Errington, Sir Eric
Holland-Martin, C. J.


Braine, B. R.
Erroll, F. J.
Holt, A. F.


Braithwaite, Sir Albert (Harrow, W.)
Farey-Jones, F. W.
Hope, Lord John


Bromley-Davenport, Lt.-Col. W. H.
Fell, A.
Hopkinson, Rt. Hon. Henry


Brooke, Henry
Finlay, Graeme
Hornsby-Smith, Miss M. P.


Brooman-White, R. C.
Fisher, Nigel
Horobin, Sir Ian


Browne, Jack (Craigton)
Fleetwood-Hesketh, R. F.
Horsbrugh, Rt. Hon. Florence


Bryan, P.
Fletcher-Cooke, C.
Howard, Gerald (Cambridgeshire)


Bullus, Wing Commander E. E.
Fort, R.
Howard, Hon. Greville (St. Ives)


Burden, F. F. A.
Foster, John
Howard, John (Test)


Butcher, Sir Herbert
Fraser, Hon. Hugh (Stone)
Hudson, Sir Austin (Lewisham, N.)


Butler, Rt. Hn. R. A.(Saffron Walden)
Fraser, Sir Ian (M'cmbe &amp; Lonsdale)
Hudson, W. R. A. (Hull, N.)


Campbell, Sir David
Freeth, D. K.
Hughes, Hallett, Vice-Admiral J.


Carr, Robert
Galbraith, Hon. T. G. D.
Hughes-Young, M. H. C.


Cary, Sir Robert
Gammans, L. D.
Hulbert, Wing Cmdr. Sir N. J.


Channon, H.
Garner-Evans, E. H.
Hurd, A. R.


Chichester-Clark, R.
George, J. C. (Pollok)
Hutchison, Sir Ian Clark (E'b'gh, W.)


Churchill, Rt. Hon. Sir Winston
Glover, D.
Hutchison, James (Scotstoun)


Clarke,Brig.Terence(Portsmouth, W.)
Godber, J. B.
Hyde, Montgomery







Hylton-Foster, Sir H. B. H.
Marshall, Douglas
Sharples, Maj. R. C.


Iremonger, T. L.
Mathew, R.
Shepherd, William


Irvine, Godman (Rye)
Maude, Angus
Simon, J. E. S. (Middlesbrough, W.)


Jenkins, Robert (Dulwich)
Maudling, Rt. Hon. R.
Smithers, Peter (Winchester)


Jennings, J. C. (Burton)
Mawby, R. L.
Smyth, Brig. J. G. (Norwood)


Jennings, Sir Roland (Hallam)
Maydon, Lt.-Comdr. S. L. C.
Soames, Capt. C.


Johnson, Dr. Donald (Carlisle)
Medlicott, Sir Frank
Spearman, A. C. M.


Johnson, Eric (Blackley)
Milligan, Rt. Hon. W. R.
Spence, H. R. (Aberdeen, W.)


Johnson, Howard (Kemptown)
Molson, A. H. E.
Spens, Rt. Hn. Sir P. (Kens'gt'n, S.)


Jones, A. (Hall Green)
Moore, Sir Thomas
Stanley, Capt. Hon. Richard


Joynson-Hicks, Hon. L. W.
Morrison, John (Salisbury)
Stevens, Geoffrey


Kaberry, D.
Mott-Radclyffe, C. E.
Steward, Harold (Stookport, S.)


Keegan, D.
Nabarro, G. D. N.
Steward, Sir William (Woolwich, W.)


Kerby, Capt. H. B.
Nairn, D. L. S.
Stoddart-Scott, Col. M.


Kerr, H. W.
Neave, Airey
Storey, S.


Kershaw, J. A.
Nicholls, Harmar
Stuart, Rt. Hon. James (Moray)


Kirk, P. M.
Nicholson, Godfrey (Farnham)
Summers, G. S. (Aylesbury)


Lagden, G. W.
Nicolson, N. (B'n'm'th, E. &amp; Chr'ch)
Sumner, W. D. M. (Orpington)


Lambert, Hon. G.
Nield, Basil (Chester)
Taylor, Sir Charles (Eastbourne)


Lambton, Viscount
Noble, Comdr. A. H. p.
Taylor, William (Bradford, N.)


Lancaster, Col. C. G.
Nugent, G. R. H.
Teeling, W.


Langford-Holt, J. A.
Nutting, Rt. Hon. Anthony
Thomas, Rt. Hn. J. P. L. (Hereford)


Leather, E. H. C.
Oakshott, H. D.
Thomas, Leslie (Canterbury)


Leavey, J. A.
O'Neill, Hn. Phelim (Co. Antrim, N.)
Thomas, P. J. M. (Conway)


Leburn, W. C.
Ormsby-Gore, Hon. W. D.
Thompson, Kenneth (Walton)


Legge-Bourke, Maj. E. A. H.
Orr, Capt. L. P. S.
Thompson, Lt.-Cdr, R. (Croydon, S.)


Legh, Hon. Peter (Petersfield)
Orr-Ewing, Charles Ian (Hendon, N.)
Thorneycroft, Rt. Hon. P.



Orr-Ewing, Sir Ian (Weston-S-Mare)



Lennox-Boyd, R, Hon. A. T.
Osborne C.
Thornton-Kemsley, C. N.


Lindsay, Hon. James (Devon, N.)
Pannell N. A. (Kirkdale)
Tiley, A. (Bradford, W.)


Lindsay, Martin (Solihull)
Page, R. G.
Tilney, John (Wavertree)


Linstead, Sir H. N.
Peake, Rt. Hon. O.
Touche, Sir Gordon


Llewellyn, D. T.
Peyton, J. W. W.
Turner, H. F. L.


Lloyd, Rt. Hon. G. (Sutton Coldfield)
Pickthorn, K. W. M.
Turton, R. H.


Lloyd, Maj. Sir Guy (Renfrew, E.)
Pilkington, Capt. R. A.
Tweedsmuir, Lady


Lloyd, Rt. Hon. Selwyn (Wirral)
Pitman, I. J.
Vane, W. M. F.


Lloyd-George, Maj. Rt. Hon. G.
Pitt, Miss E. M.
Vaughan-Morgan, J. K.


Longden, Gilbert
Pott, H. P.
Vickers, Miss J. H.


Low, Rt. Hon. A. R. W.
Powell, J. Enoch
Vosper, D. F.


Lucas, Sir Jocelyn (Portsmouth, S.)
Price, David (Eastleigh)
Wade, D. W.


Lucas, P. B. (Brentford &amp; Chiswick)
Price, Henry (Lewisham, W.)
Wakefield, Edward (Derbyshire, W.)


Lucas-Tooth, Sir Hugh
Prior-Palmer, Brig. O. L.
Wakefield, Sir Wavell (St. M'lebone)


MoAdden, S. J.
Profumo, J. D.
Walker-Smith, D. C.


MoCallum, Major Sir D.
Ralkes, Sir Victor
Wall, Major Patrick


Macdonald, Sir Peter
Ramsden, J. E.
Ward, Hon. George (Worcester)


Mackeson, Brig. Sir Harry
Rawlinson, P. A. G.
Ward, Miss I. (Tynemouth)


McKibbin, A. J.
Redmayne, M.
Waterhouse, Capt. Rt. Hon. C.


Mackie, J. H. (Galloway)
Rees-Davies, W. R.
Watkinson, H. A.


McLaughlin, Mrs. P.
Remnant, Hon. P.
Webbe, Sir H.


Maclay, Rt. Hon. John
Renton, D. L. M.
Whitelaw, W.S.I.(Penrith &amp; Border)


Maclean, Fitzroy (Lancaster)
Ridsdale, J. E.
Williams, Rt. Hn. Charles (Torquay)


McLean, Neil (Inverness)
Rippon, A. G. F.
Williams, Gerald (Tonbridge)


Macleod. Rt. Hn. lain (Enfield, W.)
Roberts, Peter (Heeley)
Williams, Paul (Sunderland, S.)


MacLeod, John (Ross &amp; Cromarty)
Robertson, Sir David
Williams, R. Dudley (Exeter)


Macmillan, Maurice (Halifax)
Robinson, Sir Roland (Blackpool, S.)
Wills, G. (Bridgwater)


Macpherson, Niall (Dumfries)
Robson-Brown, W.
Wilson, Geoffrey (Truro)


Maddan, M.
Rodgers, John (Sevenoaks)
Wood, Hon. R.


Maitland, Cdr. J. F. W. (Horncastle)
Roper, Sir Harold
Woollam, John Victor


Maitland, Patrick (Lanark)
Ropner, Col. Sir Leonard
Yates, William (The Wrekin)


Manningham-Buller, Rt. Hn. Sir R.
Russell, R. S.



Markham, Major Sir Frank
Sandys, Rt. Hon. D.
TELLERS FOR THE NOES:


Marlowe, A. A. H.
Schofield, Lt.-Col. W.
Mr. Buchan-Hepburn and


Marples, A. E.
Scott-Miller, Cmdr. R.
Mr. Studholme.


Question put and agreed to.

Resolved,
That an humble Address be presented to Her Majesty, as followeth:—
Most Gracious Sovereign,
We, Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom of Great Britain and Northern Ireland, in Parliament assembled, beg leave to offer our humble thanks to Your Majesty for the Gracious Speech which Your Majesty has addressed to both Houses of Parliament.

To be presented by Privy Councillors or Members of Her Majesty's Household.

SUPPLY

Committee to consider of the Supply to be granted to Her Majesty, Tomorrow. —[Mr. Buchan-Hepburn.]

WAYS AND MEANS

Committee to consider of the Ways and Means for raising the Supply to be granted to Her Majesty, Tomorrow.—[Mr. Buchan-Hepburn.]

PUBLIC ACCOUNTS

Committee of Public Accounts nominated:—

Mr. John Arbuthnot, Mr. Benson, Mr. Henry Brooke, Colonel Crosthwaite-Eyre, Mr. Ernest Davies, Mr. Hoy, Mr. Airey Neave, Mr. Oliver, Mr. Peyton, Mr. Ramsden, Mr. Goronwy Roberts, Mr. Steele, Mr. Thornton-Kemsley, Captain Waterhouse, and Mr. West:—

Minutes of the Evidence taken before the Committee of Public Accounts in the last Session of the last Parliament referred to the Committee.—[Col. J. H. Harrison.]

Orders of the Day — COMMUNICATIONS WITH ISRAEL

Motion made and Question proposed, That this House do now adjourn.—[Col. J. H. Harrison.]

10.13 p.m.

Mr. William Teeling: During the last few days we have been discussing foreign affairs, among other things, and Israel has come very much to the fore in these debates, especially yesterday. I do not want to enlarge on that point beyond saying that after reading today's HANSARD all those who, like myself, have recently been in Israel feel that this House must now understand that the people there are rather suspicious of whether we are not too much influenced by the Arab countries around it.
There is one particular point, the question of communications with Israel, in which, I believe, the Israeli Press is actually wrong in thinking that there is too much Arab influence. That is why I want to concentrate this evening on the matter of communications with Israel and of B.O.A.C. flights to that country, in particular.
However, I should like to refer to other obvious means of communication, including that of getting across the boarder from Jordan and other adjacent countries. Those are points which, on another occasion, should be discussed. It is not very easy to deal with the whole question in an Adjournment debate like this, because it is not customary to ask for more than a Minister to reply. Therefore, even if I mention one or two other points, the only one to which I can

expect an answer is the question of the air transport to Israel, as that is all that the Ministry of Transport and Civil Aviation can answer.
As I have said, however, there is the question of contact with Israel from Jordan and Egypt, and not only from land sources, but also by sea. On another occasion I should like to talk about the communications from the point of view of tourists. There are not only Jewish tourists who want to go to Israel, but there are also Christian tourists, to whom Jerusalem, Nazareth, Bethlehem, and so on, mean a great deal. At the moment, one cannot go to Nazareth and Jerusalem, or go to the whole of Jerusalem and on to Bethlehem, and come back again, because of the problems of the borders. These are things that one day ought to be studied from the point of view of the Christian who wants to travel there.
Then there is the question of broadcasting to that country. That is also a form of communication which should be dealt with at some other time. I should like only to say that while I and three or four other Members of Parliament, from both sides of the House, were recently in Israel, at the time when my right hon. Friend the Member for Woodford (Sir W. Churchill) resigned the Premiership, it was very interesting and touching to see how much he was beloved in Israel and the great interest that was taken in the announcement of his resignation.
I can truly say that Israel was happy and pleased that its Prime Minister was asked to take part in the broadcast tribute made by Prime Ministers to what my right hon. Friend had done for the world as a whole. It was not uninteresting to find that at that time it was said widely—and, I believe, it is still felt—that it was the great hope of the people of Israel that one day my right hon. Friend would feel it possible to visit Israel, a country in which he is known to be very interested.
There is one point that I might fairly ask my hon. Friend the Parliamentary Secretary to answer outside his office. It is such a small point that one cannot normally raise it on an Adjournment. I refer to the question of communications by telephone with Israel. Israel is fast developing from a business point of


view, and much business has to be dealt with from this country. When one looks into the question of telephonic communications, one finds that the only times for telephoning from this country to Israel are from 11.30 in the morning to 1.15, or from 4.30 in the afternoon to 6.30. If we add two hours to convert to Israeli time, we find that telephone calls can be put through to Israel at 1.30, just when everybody has gone to lunch, continuing to 3.15, when people are just finishing their siesta. Later, one can have telephone calls at 6.30, when the Israelis are just about to go home, until 8.30, when they are in the middle of their dinner. Those are the hours which are used on week-days, including Saturdays.
Our Post Office people have, perhaps, forgotten that the Jewish Saturday is the equivalent of our Sunday, but on Israel's first day of the week—Sunday, which is the equivalent of our Monday—the Sunday service allows only half that time to make calls. They are confined simply to the luncheon siesta interval on Israel's first day of the week, when the Israelis are probably getting down to business for the coming week. I do not know whether that has been realised over here but it might be a point that could be discussed and, possibly, an alteration made.
Another thing which we must remember is the difficulty of getting the necessaries for industry to Israel, and one is a question of oil. There is the pipeline to Haifa, which is now closed. The possibility of going by the Suez Canal is also stopped, so we have Israel, within about 200 miles of some of the richest oilfields in the world, having to get its oil from Venezuela. There is also the fact that, in spite of all this, Israel has become a very great industrial area and is fast developing. If that is so, and if, as I believe, a great deal of it is due to contacts with this country and with the Commonwealth, we must make certain that the United Kingdom keeps in close touch with Israel.
The most modern and the most obvious means is by air, and it was with great regret that the few of us who were out there and many other people here heard that B.O.A.C. had decided to close its airline from the end of April. I refer to the direct airline between this country and Israel. Immediately, one saw in the Israeli papers, and I found in discussing

it with people there, the feeling that this was probably due to Arab pressure. Not only was it said that we were closing down the B.O.A.C. airline to Lydda, but the reason given for doing this was a lack of aircraft or a lack of equipment. Yet, at the same time, we were stepping up the airline and the number of aircraft used to Beirut.
If it is possible, I should like my hon. Friend the Parliamentary Secretary to the Ministry of Transport and Civil Aviation to explain why it was that we were stepping up our communications with Beirut at a time when we said it was impossible to carry on the service to Lydda. As far as I can see myself, there was justification for that, because it is the case at the moment, as most hon. Members will know, that due to the Arab pressure and the boycott by the Arabs, it is not possible for aircraft going to Israel to fly on to other parts of the Arab world.
Therefore, B.O.A.C., which, we must remember, is a world-wide organisation, which does not include the area covered by B.E.A., but only flies over it, makes the first landing in Israel. If that is to be a terminal, it is obviously not going to be very practical from the business point of view to send the most modern aircraft there, because they cannot go any further. I think that that is now understood by most people in Israel, and it is the headache of B.O.A.C. As far as I can see, from making inquiries, B.O.A.C. very definitely want, if they can, to have an efficient line going to Lydda, but from the economic point of view, they must let it go further.
Of course, my hon. Friend cannot answer for business companies doing business work on these lines, but he can tell us a little more about the matter from the political aspect. From the business point of view, one can well understand B.O.A.C. saying that, if it is only business, they cannot really countenance this airline continuing only as far as Lydda. What are the possibilities of it being continued further? At present, there is the whole Far Eastern field, and we have to realise that we have a modern community in Israel and people who want to travel on—people who not only go to Israel from Europe, but very often who want to go still further. Indeed, there are Israelis themselves who would go from there into the Far East.
I therefore ask why it is not possible to extend the route to Teheran. Why should it not be possible to extend the route to Teheran, whither it went in the old days? As far as I know there is nothing to stop one's going round the coast and so not passing over Arab territory, and the extra distance is not great. If it were possible to extend the line to Teheran it would be possible to fly on to the Far East, a great market with which Israel at the moment has no special contact. As I understand, the Israeli Government and E1-A1, the Israeli line, are more than willing to co-operate with us.
There is yet another prospect, and that is to fly on to South Africa. While I was in Israel I was immensely impressed by the advances being made by the settlements organised by the South Africans in Israel, and by the number of Jews I met who had come from South Africa, rich Jews who were visiting Israel as tourists, or for religious purposes, or on business. I believe that there is a tremendous outlet there. At present, B.O.A.C. has about five different routes going that way which all go through Cairo. Surely, one of them could be switched to go to Tel Aviv and Lydda and on from there to Nairobi and so to South Africa. This, I think, would be a possibility, and perhaps an excuse for B.O.A.C. to send on their best aircraft for Lydda.
Now, of course, there is nothing there at all. Up to two months ago B.O.A.C. was not putting on the best service because it was not economic. As a result of its not being economic, so that the best service was not put on, rival lines came in with better services—K.L.M., and so on, and people did not want to use B.O.A.C. Many rich people in London go constantly on business to Israel, and they find it easier to fly over the Continent, change aircraft, go on in complete comfort to Israel, and do the journey two hours more quickly than if they went by B.O.A.C. Yet everyone wants, if at all possible, to go by a British line.
Then there is the question of getting one's money out of Israel if one makes a profit there. Obviously, that is a question to be discussed from a business point of view mainly. However, I think it fair to say that the Israeli Government have probably made agreements with all the other different lines already, so that it is

not easy for them to do anything fresh about the present arrangements; but if by any chance B.O.A.C. were able to extend a service beyond Lydda I think it would be quite likely that the Israeli Government would be prepared—and could—make new agreements, and make it possible to satisfy any B.O.A.C. request.
There are other lines at present which are rubbing their hands because B.O.A.C. has gone out, because to them is going the extra business—K.L.M., the French line, the Italian, and so on. Whatever offers have already been made to them by the Israeli Government could also go to B.O.A.C., and the same advantages that they give to one or two of those other lines. In other words, B.O.A.C. could pool services with E1-A1, and pool various bookings.
America, of course, is one of the main sources from which to draw people who want to go to Israel. Today, because B.O.A.C. has gone out of the market, there are some five lines going to or from America to Tel Aviv. Of those, all four that are run by foreign countries, the Italian, the French, K.L.M. and T.W.A., now go via Paris and do not contact London at all. The only one that does is El-Al, the Israeli line itself.
B.O.A.C. has for a long time been trying to get American Jewry who are visiting Israel to go via Britain. From our own tourist point of view, as from every other business point of view, it could be a great and serious loss to us that we are not getting this market. We are told that all this may possibly develop in the future, but one of the reasons why I brought up this subject tonight is because I feel that there is not the urgency about it which there ought to be. We should be doing this much more quickly. The very fact of the closing down has caused a lot of unhappiness. Nothing much has happened since. There have been discussions, but we are in the position that we are losing this market to the outside world.
The alternative to B.O.A.C. even if only temporary is B.E.A. which goes as far as Cyprus. Could not they go on to Lydda until such time as Lydda ceases to be a terminus and becomes just a transit airport? It is uncertain whether this could be done, but I believe that it could. I should like to appeal to B.E.A. to do something about it.
Having travelled the route myself, I know that one goes by an extremely comfortable line, by Viscount, to Nicosia in Cyprus. Then one has to transfer into a DC-3 which is usually—certainly, when I travelled—absolutely packed out; with luggage at the front and at the back to keep a balance; and with a man trying to serve some kind of a meal in boiling heat on board and in one's lap. Finally, after what seems a lengthy period, one reaches Lydda.
That is not good enough in these days, when we have direct services by K.L.M. and by the American lines and others. It is time that we had Viscounts as well to go on, without changing aircraft, and I believe that B.E.A. could probably do that. We must realise that Cyprus is, to a certain extent, on its own in this matter, and that, therefore, the "powers that be," the Governor and others, must be consulted before anything can be done. But I beg that something be done with haste in this matter. At first, B.E.A. felt that they would be used as a stop gap, but I do not think that they feel that any longer. They feel now that they could help in this matter, and on this particular point.
I wish to make one final appeal, the appeal which can be made by those interested in the future linking up of our two countries. Since 1948 the population of Israel has increased from between 400,000 and 500,000 to about 1½ million. A large number of those people are connected with this country, and still more with the Commonwealth. I found a growing tendency on the part of the Government and others to get as close a contact with the British Commonwealth as possible, and a keen desire to link up with this country, both from the sterling point of view and the trade point of view. They do not wish to link so much with America as with this country. If something could be done quickly to make sure that we have these lines working, I believe that it would be of the greatest assistance.
There is a feeling in Israel that there is some Arab pressure, and I hope that I have been able to make it clear that that is not the case. It is the question of a sheer business proposition. If something soon could be arranged, we should be working on a much happier basis. It was said to me by a prominent

Israeli that they want friendship with this country, not only by words but by communications. The most modern and up-to-date means of communication are air communications. I therefore appeal to my hon. Friend to do everything in his power with those concerned to try to hurry on this matter, which is one of real urgency, and to make it possible for us to be linked together once again.

10.35 p.m.

The Joint Parliamentary Secretary to the Ministry of Transport and Civil Aviation (Mr. John Profumo): My hon. Friend the Member for Brighton, Pavilion (Mr. Teeling) has spoken tonight, as he so frequently does, on a topic on which he is an expert and has personal knowledge. I know that he will acquit me of any discourtesy if I deal only with those aspects of the general problem which has prompted his speech and which pertain to civil air transport.
However, with regard to the telegraph and telephone communications to which he referred, I am informed by my right hon. Friend the Postmaster-General that the telegraphic service is normally operated over a modern two-way radio telegraph circuit which is kept open continuously. It has proved quite adequate to handle the normal traffic load. This is, approximately, 400 messages per day each way. Incoming messages from Israel are below average on Saturdays, and outgoing messages from the United Kingdom are below average on Sundays.
A second radio channel is available when required, and there is also a submarine telegraph cable, owned by Cable and Wireless, from Haifa which connects with the Commonwealth telegraph cable network at Larnaca in Cyprus. I understand that the Israeli Administration has never suggested that these arrangements are in any way inadequate.
My right hon. Friend also informs me that the telephone service, to which my hon. Friend referred, is operated over a radio telephone channel which is open during periods which are agreed by the Israeli Administration, and that there has never been any suggestion by Israel of an extension to the Sunday schedule. I understand that the evening schedule tends to be interrupted by periods of poor


radio propagation and that a communication was sent to Israel last May suggesting an extension of the morning schedule as an alternative. So far, I believe, no reply has been received.
Now let me deal with the airline problem. I should perhaps make it quite clear that even in this field I am speaking of matters which fall within the discretion of the Airways Corporations for which my Department has no direct responsibility. The suspension of the service by B.O.A.C. and the possibility of an action by B.E.A. to fill the gap are, of course, both matters which must be settled according to the commercial judgment of the Corporations, and the Government have no power to require either Corporation to operate a service if it does not feel able to do so.
Here, therefore, are the factors which led up to the suspension of B.O.A.C.'s services from the United Kingdom to Israel. The final decision was taken because of the shortage of aircraft resulting from the Comet disasters last year. The London to Lod service was by no means the only one affected. For example, the services from the U.K. to South America were also suspended, and the frequencies on other routes have had to be substantially altered.
It is not unnatural that the routes selected for suspension by the Corporation were those which in its opinion were least remunerative. There appears to be no doubt that this particular service had been operated with very low load factors. In December last year the passenger load factor was 20·5 per cent., which is equivalent to saying that on an average only 11 of the 54 seats available were occupied. So my hon. Friend will see that the commercial situation was not one which was remunerative to the Corporation. Moreover, in choosing to suspend this service, B.O.A.C. was influenced by the consideration that it was not leaving Israel altogether without air communications with the United Kingdom.
My hon. Friend has already mentioned the EL-AL service and also the Viscounts which operate to link up with the thrice weekly Dakota services operated by Cyprus Airways between Nicosia and Lod. It would be totally wrong—I am

glad that my hon. Friend mentioned this —if there was an impression either here or in Israel that this suspension was due to Arab pressure or any other form of political pressure. I want to emphasise that the decision was taken solely on economic grounds. It would be equally wrong to think that B.O.A.C. was not anxious to resume the service to Israel. It certainly is anxious to do so, and although it has not yet made any definite plans to restart the service, it regards the suspension as temporary only and intends to resume it as soon as conditions have improved sufficiently to indicate that there is a reasonable prospect of economic operation.
There are several factors which will tend to influence the shaping and the timing of B.O.A.C.'s plans. For instance, there is the question of the availability of Britannia aircraft. This new airliner will improve operationally the prospects of making use of Lod as a transit point on trunk routes to the East and South. Another factor must be the trend of traffic demand, and a further one, any changes in Israeli regulations concerning the export of currency earned. Any concessions which may be offered by the Israeli Government will, I am sure, be carefully considered by B.O.A.C. on their commercial merits.
Finally, I should like to say a word about B.E.A.'s possible contribution to a service to Israel. This question was gone into by the Corporation, but it was shown conclusively that it would not be practical, operationally, this summer, and as a short-term proposition, it was not commercially attractive. However, I understand from Lord Douglas that the question of substituting a Viscount for the DC-3 between Nicosia and Lod is under active consideration. I am certain that the observations and suggestions made by my hon. Friend will be most carefully studied by the Corporation, and I am only too glad to have had this opportunity of clearing up a problem which I fully recognise was giving some concern both here and in Israel.

Adjourned accordingly at nineteen minutes to Eleven o'clock.